Apple working on wireless earbuds
Apple working on wireless earbuds Getty Images

Apple is reported to be working on wireless earbuds featuring a custom Bluetooth chip for a launch in September alongside its next iPhone, which is likely without a headphone jack.

One of the significant changes Apple is mulling for its 2016 iPhone editions dubbed iPhone 7 and 7 Plus is the removal of the headphone jack to make the phones thinner with improved water-resistance capacity. More than 300,000 people have signed a petition urging Apple to retain the standard headphone jack in its upcoming iPhone.

A source having knowledge of the matter told Forbes that the low-power Bluetooth chip has been developed by Passif Semiconductor, a startup Apple acquired in 2013.

Apple planned to launch the Bluetooth headphone in 2015, but the release was put off due to Bluetooth performance issues, the source said, adding: "The way it works at Apple is if it doesn't work 100%, it gets cut." But it remains unknown if the wireless earbuds would be equipped with Apple's Bluetooth chip or that procured from any other third party supplier.

Apple usually sources chips from third-party vendors for its wireless technology. For instance, the cellular modems it uses come from Qualcomm while Bluetooth and Wi-Fi chips come from Broadcom. The latest move to build its own Bluetooth chip is attributed to the company's desire to make more use of its own components, while cutting reliance on vendors.

The A4 processor, powering the first generation iPad, is Apple's first in-house chip. Similarly, the iPhone 5s launched in 2013 packs an A7 chip, the company's first 64-bit processor.

Earlier this year, Apple was reported to be prototyping a new set of Bluetooth earphones, using the resources from its 2014 acquisition of Beats Electronics, for a launch alongside the iPhone 7. The headphones are said to be similar in concept to the Motorola Hint headset and Bragi's new Dash headphones.

Bluetooth headsets are a hot trend, accounting for 54% of total headphone sales in the US in the first six month of this year, according to research firm NDP. But the earbuds suffer from performance and battery life issues.

In June, Samsung introduced cord-free earbuds called Gear IconX, which can track the wearer's fitness details and provide feedback on their running performance. The IconX offers 4GB storage and can hold up to 1,000 songs. Its battery can last for 90 minutes, claims Samsung.

"We continue to see Bluetooth headphones accounting for a greater percentage of sales in the market. We'll see more entry-level products in the market. But the big question is what we'll see this fall with the iPhone 7. If the headphone jack is removed, we estimate that shift to Bluetooth to become more accelerated," said Ben Arnold as NPD analyst.