Shares of Apple Inc (AAPL.O) fell more than three per cent on Friday after Bloomberg News reported that iPhones launched later this year will use modem chips with slower download speeds than some rival smartphones.

Apple is widely expected to upgrade its iPhone this year, which marks the device's 10th anniversary, and suggestions that its technology will lag the performance of high-end smartphones running Alphabet Inc's (GOOGL.O) Android system could hurt its sales.

An Apple spokesman did not immediately respond to a request for comment.

Apple supplier Qualcomm Inc (QCOM.O) sells modems capable of downloading data at cutting-edge 1 gigabit speeds, but rival chipmaker Intel Corp's (INTC.O) modem technology does not yet have that capability, according to the Bloomberg report.

Since Apple is traditionally reluctant to rely on just one supplier, it is using modems from both companies, but capping download speeds of the quicker Qualcomm modems so that all of the new iPhones perform the same, Bloomberg reported, citing unnamed sources.

Shares of the Cupertino, California company have surged 29 per cent so far in 2017, largely in anticipation of the iPhone upgrade. The stock on Friday declined 3.5 per cent to US$149.60.