Apple Inc.’s (NASDA:AAPL) upcoming iPhone model, presumably called the iPhone 6, could feature near field communication, or NFC, as the core technology for the handset’s mobile payment system, according to a new report Tuesday.
Craig Hettenbach, an analyst at Morgan Stanley, said in a recent note to investors that NFC is ready for market and the iPhone 6 could pave the way for its widespread commercial adoption, MacRumors reported, adding that Netherlands’ NXP Semiconductors NV (NASDAQ:NXPI), which supplies the M7 motion-sensing chip found in the iPhone 5s is expected to provide the necessary wireless hardware for the technology.
Here is an excerpt from Morgan Stanley’s note, according to MacRumors:
NXP is well positioned to participate in Apple’s mobile payments ecosystem. The company signed a licensing agreement with a customer in Q4’13, who we believe is Apple, related to its emerging ID business. A recent patent filing by Apple revealed potential use of NFC and secure element, which we think could be embedded. NXP has also accelerated R&D spend to support a new program related to the IP deal, with revenue expected in 2H, lining up well with the launch of iPhone 6. We see this potentially adding $250mn in sales and EPS of $0.25 in 2015.
Apple, which has implemented technologies such as Wi-Fi and Bluetooth for short-range communication features including AirDrop and iBeacons, is also rumored to be exploring NFC as an alternative.
According to a recent patent application, Apple was investigating a secure, NFC-based wallet that allows customers to make purchases wirelessly through their phone. The company was also said to be updating its in-store point-of-sale system with one that supports NFC, MacRumors reported.
Ming-Chi Kuo, an analyst at KGI Securities, also said in March that Apple was building NFC chips for the iPhone 6, a claim that was echoed by Brightwire earlier this month, saying that the iPhone-maker has reached an agreement with China UnionPay on a mobile payment service.
Apple’s CEO Tim Cook also admitted during a earnings conference call in January that the company is interested in the mobile payments segment.
“The mobile payments area in general is one that we’ve been intrigued with. That was one of the thoughts behind Touch ID,” Cook said.