Apple Preps For 5G Future By Mulling Purchase Of Intel's German Modem Business
Every so often, a transformative technology comes along. The advent of the Internet and USB connectivity both fall into that category, and looking ahead, the wave of 5G communication that is coming has the potential be transformative as well. It's no surprise, then, that Apple would mull buying a major piece of Intel's modem business.
While not surprising, it's both interesting and savvy. The latest iPhone models have Intel 4G modems inside, and Intel may have thought that this would be an ongoing thing. But then Apple and Qualcomm announced a chip licensing settlement after having duked out their differences in court, leaving Intel in an awkward position.
Intel subsequently announced its exit from the 5G smartphone modem business to instead focus its 5G efforts on "network infrastructure and other data-centric opportunities." Maybe this was Apple's intent all along, part of a long game. As is often said about New England Patriots coach Bill Belichick, Apple may have been playing chess while everyone else played checkers.
According to a report by The Information, Apple is in discussions to buy Intel's smartphone modem business in Germany, a setting that is the foundation for Intel's modem group. Intel's modem group spans the globe, but Germany is a key location—it's where Infineon operated its modem business when Intel acquired it in 2011 for $1.4 billion.
Should a deal be reached, Apple would likely bring in hundreds of modem engineers, and of course important (and valuable) technology and IP. The goal would be for Apple to develop 5G modems in-house. How it gets there, though, is potentially brilliant.
We don't know the financial terms of Apple's chip licensing deal with Qualcomm, but with Intel stepping in as the sole supplier of 4G modems for iPhone devices, Apple had leverage in hammering out a deal. Now in short order, Apple made a follow-up move that essentially pushed Intel out of the game. That move may have devalued Intel's smartphone modem business, making it ripe for a buyout by Apple. in today's slang, that's referred to as #savage.
Intel won't just give its modem business away, though.
"We have hired outside advisers to help us assess strategic options for our wireless 5G phone business," Intel said in a statement. "We have created value both in our portfolio of wireless modem products and in our intellectual property. We have received significant interest in the business but have nothing more to say at this time."
Even though talks are reportedly ongoing, this is still a long game for Apple. It's said the company does not expect to release devices containing its own modems until 2025, instead of 2021 as previously thought. That may not be such a big deal—5G is starting to roll out, but will likely take years for access to be ubiquitous.
Either way, Apple is setting itself up to be more self-reliant in hardware than ever.
