iPhone 8 May Not Be as Fast as Rivals When It Comes to LTE Speeds

Verizon, AT&T and the rest of the US wireless industry have a big boast for this year's crop of smartphones: thanks to network upgrades, devices will be able to download as much as a gigabit of data in a single second - speeds 100 times faster than before.

But that won't be the case for Apple's newest iPhones, devices to go on sale later this year, leaving the company's most important product potentially lagging behind the data performance of rival smartphones.

The reason stems from the delicate and sometimes complicated way Apple manages the supply of the components embedded in its flagship device - in this case, the modems, which handle the connection between a phone and the cellular network. One of Apple's suppliers, Qualcomm, sells a modem capable of the 1 gigabit download speeds. Another supplier, Intel, is working on a modem with the same capability, but it won't be ready for the iPhone's introduction, according to people familiar with Apple's decision.

iPhone 8 Running on iOS 11 Leaked in Renders for the First Time

The shares fell as much as 1.6 percent to $152.56 in New York, the biggest intraday drop since May 17.

Apple could in theory just use Qualcomm's chips, but it has an aversion to being dependent on a single supplier, and its relationship with San Diego-based Qualcomm is particularly thorny. Apple is embroiled in a bitter legal fight with the chipmaker, accusing the supplier of maintaining an illegal monopoly, and it's seeking to loosen Qualcomm's grip on the market for high-end smartphone modems. That's why Apple will stick with Qualcomm modems for some of its new iPhones while relying on Intel for others.

Until Intel is able to offer its chips with matching features, Apple won't enable some of capabilities of the phones running with Qualcomm modems, said the people, who asked not to be identified because the plan isn't public. Apple, Qualcomm and Intel declined to comment.

Apple's decision clashes with the marketing plans of a cellular industry desperate to show off faster network speeds to grab market share. The top US wireless carriers - Verizon, AT&T, T-Mobile US, and Sprint - have declared 2017 the year of 1 gigabit speeds.

The carriers are already in a fierce price battle for subscribers. As the pool of new customers has declined, most of the user gains are coming at the expense of rivals. Sprint and T-Mobile have been taking customers from AT&T and Verizon by offering cheaper unlimited data at a time when video hungry users seek lower-cost plans to support their habits. The ability to advertise a service that's 100-times faster may help carriers shift consumer focus to network performance and away from cut-throat pricing.

T-Mobile promised to have the first 1 gigabit data service available in the US this year and has already started making network upgrades, Chief Technology Officer Neville Ray said in February. AT&T has started 1 gigabit mobile service in Austin, Texas, and plans to expand to as many as 20 cities this year. Verizon will begin 5G trials in 11 markets this summer and plans to start mobile testing of 1 gigabit speeds in those cities.

Sprint has been one of the most aggressive proponents of 1 gigabit mobile speeds, promising in December that it would offer the fastest service in the industry. Sprint said it will have at least three 1 gigabit capable phones available this year - with the exception of iPhones.