Apple's rumoured low-cost iPhone will use Qualcomm's Snapdragon mobile system on a chip (SoC), according to reports.
The China Times' source claimed that Apple will use TSMC's 28nm process to build a Snapdragon SoC for the cheap iPhone.
Apple Insider notes that there are two 28nm-based classes of Snapdragon that offer a cellular modem, WiFi and Bluetooth. That report suggests that use of an all-in-one platform could save on component costs for the rumoured low-cost handset.
Back in January it was rumoured that Qualcomm's Snapdragon chipsets - the dual-core MSM8960 or the quad-core APQ8064 - would be used in the budget iPhone.
Apple has denied that it has plans to make a budget iPhone, however, there are calls for the company to produce a low-cost iPhone for the emerging markets where smartphones are growing in popularity, but due to the networks not subsidizing the costs for consumers, iPhones are not an affordable option for the majority of people.
Rumour: Intel to build chips for Apple
In related news, Reuters has reported rumours that Intel and Apple may team up to manufacturer ARM chips for iOS devices.
According to that report, Intel's foundries could be used to produce chips to Apple's specification.
Intel is large-scale and equipped with advanced fabrication technology, notes that report. However, there have been claims for some time that TSMC will take on chip building for Apple from Samsung. TSMC is the largest contract chip manufacturer in the world.
Apple is already designing products based on TSMCs 20-nanometer specifications, according to industry sources.
Apple is trying to distance itself from its reliance on Samsung. Apple is thought to be looking for new partners to supply some of the parts that Samsung was providing, including the screen and memory chip. Samsung and Apple have been at war, with each company saying that the other has stolen its patented technology. News that Apple is looking for alternative suppliers suggests that the outcome of the Apple versus Samsung California trial could cost Samsung far more than it is supposed to pay Apple for infringing its patents.
Intel's search for a new CEO
News that Intel's Paul Otellini plans to retire in May has lead to speculation that the next CEO may be more focused on contract-manufacturing of chips for the mobile arena.
Becker Capital Management's Pat Becker Jr told Reuters: "If you can have a strategic relationship where you're making chips for one of the largest mobile players, you should definitely consider that. And for Apple, that gets them a big advantage."
Apple making chips in Israel
Apple's chip plans go beyond deciding who will manufacturer them. The company has been hiring experts for a new R&D facility in Israel.
Apple is said to have hired 100 Texas Instruments employees and rented office space in Ra'anana in Israel.
As we reported last year, Apple had hired former Texas Instruments (TI) engineers to expand its chip-making workforce in Israel and build up its research and development centres in the country. Last year TI laid off hundreds of staff at the company's Ra'anana development centre.
Apple's newly hired engineers are likely to be working for Technologies group boss Bob Mansfield. The group includes the semiconductor team who work on processors for Apple's mobile devices and have "ambitious plans for the future," according to Apple.