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Mon, Jul 02, 2007 - Page 11 News List

Interiors of iPhones hold key to investment secrets


Much has been made of the exterior of Apple's iPhone -- its sleek look, touch screen and high-resolution video -- but just as intriguing to investors may be its interior.

Little is officially known about the components that make up Apple's combination cellphone, music player and Internet device, although the guessing has already started.

To some it may sound like a harmless parlor game, but it is actually a high stakes endeavor.

That's because being an iPhone component supplier could significantly boost a company's sales should Apple hit its goal of selling 10 million iPhones next year. Even if iPhone sales fall short of Apple's goal, many component makers stand to benefit as other handset manufacturers scramble to come up with their own iPhone-like features.

Among those speculated as iPhone suppliers are Seoul-based Samsung Electronics Co; Santa Clara, California-based Marvell Technology Group Ltd;Irvine, California-based chipmaker Broadcom Corp and several Taiwanese firms.

Representatives for the companies mentioned in this article did not comment.

To date, at least three different analysts have listed these companies in various research notes.

Of all the component makers, Samsung's involvement is ironic because its music player competes with California-based Apple's iPod.

Nonetheless, Samsung is supposedly supplying the chips that serve as the device's core processors, effectively the brains of the device, as well as the chips running the video elements.

Marvell is said to be supplying chips to power the iPhone's Wi-Fi connection and could see its sales increase 7 percent next year just from iPhones, according to one analyst's estimate.

"This device is opening up a whole new product category," UBS analyst Alex Gauna said.

For instance, the iPhone could boost sales of other cellphones that also contain Wi-Fi wireless capabilities, which would provide a further boost to Marvell as handset manufacturers buy up more of its chips.

Chipmaker Broadcom also stands to benefit, according to testimony chairman Henry Samueli gave in a trademark infringement lawsuit, during which he confirmed Broadcom chips would be inside the phone.

However, he failed to identify which ones.

Gauna believes Broadcom is supplying the chips controlling the device's touch screen, perhaps its most unique feature. As a result, Broadcom could see up to a 7 percent boost in sales next year should Apple hit its iPhone sales goal, he estimates.

Other supposed iPhone component suppliers are Infineon Technologies AG, a Munich, Germany-based maker of baseband technology, and Great Britain-based Cambridge Silicon Radio, which is supposedly supplying the device's bluetooth connectivity.

Taiwanese manufacturers are also said to be big winners, including Foxconn International Holdings Ltd (富士康控股) and its subsidiary Foxconn Technology Co (鴻準精密), which have been pegged as assembling the device and providing some of the mechanical parts, three analysts said.

These secrets are sure to spill out eventually.

While most who buy the US$500 device wouldn't dare dream of it, there is a contingent planning to crack their new toy open, and for posterity's sake, take a look at what components are inside.

"If nobody does, I will," Gauna said.

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