According to an announcement issued by Apple and Intel yesterday, the former will buy a majority share in the latter’s phone modem business for $1bn. Apple will also take over equipment and IP from Intel. The deal should be finalised by the end of 2019.
Intel is not leaving the modem business completely. It will still be allowed to build modems for Internet of Things devices, PCs, self-driving cars, etc., but not phones. According to Intel’s CEO Bob Swan, the deal will enable Intel to concentrate on other 5G technologies.
The acquisition means that Apple is now on track to produce its own 5G modems. The two companies only recently resolved their differences, at which time Intel announced its departure from the 5G phone business. Bloomberg cited analysts at the time who said that Apple-built modems might be ready by 2022.
Apple’s SVP of Hardware Technologies Johny Srouji said that the deal will “help expedite our development on future products and allow Apple to further differentiate moving forward.”
Building its own modems could potentially have major advantages for Apple. It will enable it to develop new technology as and when needed, improve the integration of those modems with its own products, and come up with new features to give its devices a competitive advantage.
The deal will also make Apple less dependent on Qualcomm, which it has accused of asking for unreasonably high patent royalties in return for access to its hardware in the past. In April, the two firms signed a six-year patent licensing deal.
Buying a supplier to bring its technology in-house is a tactic that Apple also used when it forked out $300m to buy into Dialog, a firm that earlier supplied it with power management chips for smartphones. With that acquisition, Apple took over 300 Dialog employees.