ROUSSET, France — When Apple next month rolls out its new iPhones, whose NFC (near field communication) chip will be inside?
If it’s an ST Microelectronics chip, instead of the longstanding iPhone incumbent, NXP, this could be one of the biggest upsets since Trent Dilfer won the Super Bowl — with major implications for the industry.
Right now, ST is keeping mum, not commenting on any specific design wins. Most analysts remain skeptical of the possibility, although some said it’s “conceivable.”
Look closely though. There are both external and internal factors playing into ST’s hand. In our recent interview with ST executives here, they made no secret of going after NXP in NFC, a market the Dutch chip supplier has ruled unchallenged for many years.
ST’s new confidence that it can be a viable competitor again in the NFC market is based on several factors.
First, ST believes the NFC market is poised to expand because of Apple’s recent decision to allow developers coding for iOS 11 to create apps that can read NFC tags. Of course, Android phones have been doing this for several years with little success. But as Apple throws its weight into this field, ST and other industry observers are hopeful that Apple will spur the growth of NFC applications beyond payment.
Second, ST in the past several years has been quietly amassing — through acquisitions and licensing — key technologies that it says are boosting its NFC chips’ performance, both in reliability and distance.
Third, the elephant in the room is Qualcomm’s pending acquisition of NXP. When the European Commission decided to open an in-depth investigation into the proposed merger, it cited NXP’s leading position in the NFC/SE (secure elements) chip market and Qualcomm’s dominance in the baseband market as potential problems. If the two giants combine, the Commission is concerned that they “would have the ability and incentive to exclude their rival suppliers from these markets through practices such as bundling or tying.”
Fourth, there is also an ongoing legal spat between Qualcomm and Apple. This might open the opportunity for ST to replace NXP’s NFC chips inside Apple’s new iPhones.
Asked the question, ST made no comment. Many analysts to whom we talked don’t foresee such a vendor switch in the near future, although a few suggested that Apple might be leaning toward a non-Qualcomm solution.
So, let’s break it down, with focus on the changing NFC market landscape and specific solutions ST has up its sleeve in the NFC and secure element chip market.
'World of opportunities'
As Marie-France Florentin, ST’s microcontroller, memory and secure MCU group vice president, and general manager of the secure microcontroller division, tells us, ST sees “in NFC a world of opportunities.”
The NFC chip in a smartphone represents a colossal opportunity for any chip supplier. But once a smartphone becomes a reader of different NFC tags, it opens up to many different applications for NFC/RFID and secure element chips.
They can go into not just banking and identification, but can also serve as tags for toys, create “tapping” applications in various consumer goods, work like a magic in “pairing” for communications, and enable “secure provisioning” for IoT devices, ST explained.
Phil Sealy, principal analyst at ABI Research, told us, “Commercial and large-scale use cases for NFC outside of payments have been somewhat lackluster to date, but this is partially due to the limited market opportunity, which previously could only target Android devices.”
He blamed Apple’s previous decision “to lock down its NFC capabilities” for NFC tags’ slow market momentum thus far. “Service providers and brands are unwilling to invest in a technology that can only reach a limited number of users operating NFC-enabled Android devices.” Now, however, that could change.
Next page: ST's NFC solutions