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Recent News Points to Big Things for Apple (AAPL), iPhone, and China

July 18, 2012 9:45 AM EDT Send to a Friend
Earlier this morning, Clearwire (Nasdaq: CLWR) and a unit of China Mobile (NYSE: CHL) had entered into a non-binding memorandum of understanding (MOU) to collaborate over international TD-LTE roaming between the U.S. and China.

Though not carried yet, the move might hint at a double-whammy of news for Apple (Nasdaq: AAPL).

In May, word was that Apple and China Mobile were in talks over bringing the iPhone to the world's largest mobile network carrier, with some 667 million subs. (By comparison, AT&T (NYSE: T) and Verizon (NYSE: VZ) have a combined 209 million.) Nothing has been announced since, but one of the big hangups was the third-generation (3G) network China Mobile used, which was a China-only standard.

Additionally, news reports Tuesday have Apple aiming to utilize a new technology which will provide for a thinner iPhone model...at least, the device might be thinner. Called "in-cell" technology, panels would eliminate the need for a touch panel in addition to the display panel. The adjustment would save maybe half a millimeter, but that right there is a key fact.

With 4G LTE technology comes the need for more power to run the communications equipment in a smartphone or tablet. Given that Apple is insistent about a strong user experience, it hasn't made the switch yet due to battery life issues. Should Apple be able to retain the same size of the iPhone and include a higher-capacity battery, is almost assured the next iPhone will be 4G.

Also, with China Mobile moving to a universal standard of network technology instead of being country-specific, a deal between the two should be hashed out either in the fourth-quarter of 2012, or early in 2013, depending on how the 4G network build out is going.

One key point is smartphone subs: China Mobile might have well over 660 million subs in the region, but only about 5 to 8 percent of those are smartphone users due to initial cost constraints that keep many out of the segment. However, with China continuing to see its GDP expand (even with a little slowdown), a new deal would give Apple access to about 40 million smartphone subs and might draw in more from China Mobile's already robust customer base.

And the deal is obviously good for Clearwire as well.

Shares of Apple are slightly lower while Clearwire is popping early. China Mobile is just about flat.




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