LONDON — A tiny version of the Apple iPhone is in the works according to various reports. The good news for the semiconductor industry is that a tiny iPhone (rather like the iPod Nano came after the iPod Classic) will still contain several chips and a similar bill of materials to what may come to be called the iPhone Classic.

There may be some integration of two ICs into one, but if so much of that design work must have already been done. The rumors are that Taiwan Semiconductor Manufacturing Co. Ltd and United Microelectronics Corp. are set to benefit from chip orders for the tiny gadget. The iPhone Nano is expected to launch in June which means that chip orders could come as soon as March.

If that is true, good news for the foundries could spell bad news for some of the IDMs [integrated device manufacturers] who are, perhaps, being phased out as Apple starts to accelerate the use of internal resources for design and external foundries for chip manufacture.

But it would not be all bad news. There will still be plenty of analog and power management components inside the iPhone Nano and one sector to benefit, we trust, would be European intellectual property suppliers such as ARM Holdings plc and Imagination Technology Group plc, who are present in the earlier version of the iPhone.

The original Apple iPhone is thought to have between three and five ARM processor cores inside it, but those processor cores are contained in multiple chips from several different chip vendors. As we have said in the past; wouldn't that be perfect for rationalizing into a multi-core ARM architecture? The iPhone Nano could represent the start of that process, by bolting existing chip designs together in more advanced process technologies while getting Dan Dobberpuhl and his team working on a coherent architecture to intersect a process technology further out.

While many hearts will leap at the idea of another Apple gadget being the killer application that can rebuild the semiconductor and electronics industries, we have to caution realism here.

That's partly for the reasons outlined above and partly for other reasons. The Apple iPhone Nano, has to be aimed at those technophiles who are prepared to line up all night long to be the first in their neighborhood to get an Apple anything. They did so for the iPhone Classic and now some of them are likely to line up, get the Nano version and throw the Classic to the back of the desk drawer.

But the fact is that in these hard times there are not going to be too many people prepared to do that. The main impact of the introduction of an iPhone Nano would be to allow Apple to drop the price of the Classic model in the hope of drawing more people to the platform and fending off Google and Android. But it will come with pricing pressure applied up the supply chain, at a time when chip suppliers — be they foundries or IDMs — are desperate to rebuild average selling prices as well as volume.

Nonetheless, the art of electronics business has to be the making of products that serve users — be they general consumers, commercial professionals or engineering experts — at a price that makes sense for users and producers alike. While the Apple iPhone Nano alone will not rebuild the industry, it is better to have one more appealing Apple product than not. That can be one step along the path to recovery, but with the understanding that industries always come back shaped differently to the way they went away.

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