Apple is acquiring majority of Intel's smartphone modem business

Wednesday, 31 Jul, 2019

Separately, Intel reported second quarter results on Thursday that beat analyst projections for both revenue and earnings.

This acquisition does not mean that Intel is getting out of the modem business completely. Intel, as per the deal, will retain the ability to develop modems for non-smartphone applications, such as PCs, internet-of-things devices and autonomous vehicles.

Intel's CEO Bob Swan seems to be positive about this acquisition, "This agreement enables us to focus on developing technology for the 5G network while retaining critical intellectual property and modem technology that our team has created". Crucially, Apple has been battling chipmaker Qualcomm in a long-protracted battle over the use of its smartphone modems, but the Intel modem business acquisition clears the path for Apple to release 5G iPhones in the upcoming year. This will likely save Apple millions in licensing fees. At present the company is looking forward in putting their full effort into 5G modem technology.

The whole transaction is stated to have a value of $1 billion and it will include not only staff but also the intellectual property (IP), inventory, equipment, and leases. The iPhone major though signed the deal with Intel; it will rely on Qualcomm's hardware until the patent license agreement of six years between the two companies comes to an end. Apple has accused Qualcomm of charging "disproportionately high" fees in patent royalties.

Despite the deal, Apple will continue to buy Qualcomm modem chips for some more time. Intel's data center business also recorded its first revenue decline in years.

Apple was a customer of Intel modems for iPhones that connects to networks operated by carriers such as Verizon and AT&T. Apple invested and is trying to explore a modem design with Taiwan's Global Unichip Corp., but the work is in its primary stage. Last December, job listings emerged that suggested that the company was working on its own networking hardware out of its Santa Clara and San Diego offices.

On top of that, Apple has reportedly hired a number of Intel executives. However, a Wall Street Journal report earlier this week made it appear all-but-certain that the finalization of the deal was right around the corner. But, the company's internally developed 5G modem chip could make its debut in the 2021 products.