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Infineon Chip Causing iPhone Problems: Reports

An Infineon chip could be at the root of complaints from around the world that Apple Inc's new iPhone drops calls and has unpredictable Internet links, according to a research report from Nomura.

BusinessWeek also reported on its website on Thursday that the iPhone is suffering from faulty software on an Infineon chip, and that Apple plans to fix the problem with a software update.

Representatives for Apple and Infineon declined comment.

One of the key attractions of the latest iPhone, which went on sale in July and sold 1 million in its first weekend, is faster, third-generation (3G) Web connections when compared to the first iPhone that was launched in mid-2007.

However, users have complained on websites and blogs that Internet speeds have been inconsistent and that the phone often reverts to a slower technology known as Edge even in 3G areas.

Nomura analyst Richard Windsor wrote in a research note that the problem likely involved a 3G cellular network communications chip made by Germany's Infineon.

"We believe that these issues are typical of an immature chipset and radio protocol stack where we are almost certain that Infineon is the 3G supplier," Windsor wrote in the report dated August 12.

"There are too many instances on iPhone blogs and Apple's own website for it to be coincidence. Furthermore, it is not just the U.S. but other countries as well," he wrote.

BusinessWeek's online report cited an unidentified source as saying the problem lay with Infineon technology, which it described as "fairly new and untested in high volumes outside a lab setting."

BusinessWeek reported that Apple had set up the Infineon chip to demand a more powerful 3G signal than it needed, resulting in a switch back to the slower network if there are too many people in the same area trying to use their iPhone at the same time.

The problem affects 2 percent to 3 percent of iPhone traffic, BusinessWeek said, citing two "well-placed" sources.

Infineon spokesman Guenter Gaugler declined to comment on the iPhone, but noted that the German chipmaker has been supplying 3G chipsets to phone makers such as Samsung Electronics without any problems.

Apple tends to restricts its suppliers from talking about their relationships, but several analysts have cited Infineon as the supplier of the main processor for the iPhone 3G.

Apple spokeswoman Natalie Kerris declined comment on whether iPhone was having connection problems or if it was preparing a software fix.

A spokesman for AT&T Inc., the exclusive U.S. carrier for iPhone, said that it was working well on AT&T's network and that the carrier had received very few complaints.

"This is not something that's high on our radar screen. It's not something we've had a lot of complaints about," said AT&T's Mark Siegel.

(Reporting by Sinead Carew, Additional reporting by Georgina Prodhan in London; editing by Phil Berlowitz)

Copyright 2008 Reuters.

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