Talk that Apple is planning to introduce a low-cost iPhone is hotting up, and the latest rumor is that the "iPhone mini" will be powered by Qualcomm's Snapdragon system on a chip hardware.
The rumor, first reported by China Times, has an unnamed source claiming that Apple will turn to Qualcomm for 28-nanometer Snapdragon rather than using its own A-series hardware.
The report also suggests that Renesas Electronics would be contracted to manufacture the handset's LCD drivers, while NAND flash memory would be sourced from a variety of companies, including Toshiba, Micron Technology, and SanDisk.
Before I go any further, let me point out that this discussion makes the assumption — for the purpose of discussing the rumor — that Apple is working on a low-cost iPhone. Not only has there not been a single word from Apple about this product, there is also scant evidence to suggest that it exists anywhere other than in the minds of pundits and analysts.
However, there's no doubt that this is an interesting rumor for a number of reasons
First, Qualcomm's Snapdragon silicon is manufactured by Taiwanese chipmaker TSMC, while the A-series processors that currently reside inside iPhone, iPads, iPod touches, and Apple TV devices are built by Samsung, a company with which Apple is locked in a fierce global legal battle. Apple has been working to eliminate Samsung from its supply chain, and as such, it makes sense to give any new processor contracts to a different company.
Then there's the issue of money.
Qualcomm also has hardware that might work for Apple in terms of keeping the cost of the iPhone mini as low as possible. Snapdragon 400 and 800 series hardware features on-board cellular modems, Wi-Fi and Bluetooth, which helps to reduce component and assembly costs.
A quick back-of-the-envelope calculation suggest that Apple could shave as much as $30 off the base iPhone 5 bill of materials by switching processor, display driver and memory manufacturers. Combine this with a cheaper case, and some other corner-cutting, and another $10 could be shaved off the cost.
Not bad considering that a 16GB iPhone 5 has a bill of materials of $200 to begin with.
However, on the flip side, it's hard to imagine Apple giving up control of the iPhone's processor to Qualcomm, especially given that it has had so much success in the A-series hardware. It makes more sense for Apple to get TSMC to build its processors than it does to make a shift to different hardware.
Also, how would Apple explain away the shift from its A-series hardware to Snapdragon? Would it position its own hardware as a premium product and push Snapdragon as an inferior, but acceptable alternative for a low-cost device? If the iPhone mini is the embodiment of cost cutting and racing the bottom in terms of price, then what is it about it that makes it so desirable?
This is exactly what the PC industry did with PCs for over a decade, and that didn’t work out too well for the companies involved.
There's also the issue of fragmentation that goes beyond iOS developers having to support older handsets. Would the iPhone mini have the hardware grunt required to handle current iOS apps? And what happens at the next iPhone spec bump?
Its hard to imagine a company like Apple getting into a public discussion about shaving dollars off a device's bill of materials, but it is equally hard to imagine CEO Tim Cook promoting the virtues of switching to a chip that powers a lot of the competition's devices. All of a sudden, the iPhone mini is starting to feel like an Android smartphone that just happens to run iOS.
Is it in Apple's DNA to boast about making something cheap? I'm not sure it is.
This is one rumor we will have to file under "wait and see" until we know more.