LTE handset in 2010 a longshot despite 4G iPhone hopes

Speculation is crescendoing that Verizon Wireless (NYSE:VZ, NYSE:VOD) and Apple (NASDAQ:AAPL) are not only on the verge of locking down a deal for an iPhone, but that the two plan to launch a 4G device on Verizon's new long-term evolution (LTE) network next year. But a poll of chipset makers supplying the crucial LTE silicon reveals just what an unlikely proposition that is.

A high-end concept phone with an LTE chip emerging next year isn't entirely out of the realm of possibility, but the chances of a mass-market LTE handset such as a 4G iPhone are practically nil. The release schedules of the wireless silicon providers just don't support it. Chipset makers have announced their first-generation LTE platforms, many of which will sample this year and begin shipping in volumes early next year, but almost all of those platforms are purpose-built for laptop computing, designed to be embedded in USB dongles, PC cards and eventually PCs themselves.

ST-Ericsson, the new semiconductor joint venture between Ericsson (NASDAQ:ERIC) and ST Microelectronics, has already begun sampling its first LTE chipset, the M700, but Chief Technology Officer Jörgen Lantto said the platform has been specifically developed and cost-optimized for USB dongles and other plug-in modems. Making a handset isn't the simple matter of slipping the M700 into a phone form factor, Lantto said. A handset would require an integrated application processor, a smaller chip form factor and lower power consumption. Perhaps most importantly, it would need an integrated 3G radio so the device can fall back on the much more pervasive high-speed packet access (HSPA) or CDMA EV-DO network when LTE coverage isn't available.

While laptop card makers also will need to fall back on 3G, they don't necessarily need a hardware-integrated chipset, Lantto said. Embedding separate 3G and LTE chips into a USB dongle would be far cheaper than provisioning an integrated chipset while LTE volumes are miniscule, Lantto said. Only when device volumes reach high levels—around 100 million units—does an integrated solution for an external modem make economic sense.

That said, Lantto isn't ruling out entirely the possibility of a vendor making a handset with M700, or any of its counterparts from ST-Ericsson's competitors. An enterprising device maker could embed separate 3G and LTE chips as well as application processor, integrating them all through software. In fact, Lantto said ST-Ericsson has received inquiries from customers about doing just that. But any device using piecemeal components would likely be extremely expensive, highly inefficient and power-leaching design.