UPDATE 7/25: Apple today confirmed plans to buy Intel's 5G modem business. "Approximately 2,200 Intel employees will join Apple, along with intellectual property, equipment and leases. The transaction, valued at $1 billion, is expected to close in the fourth quarter of 2019," the company said on Thursday.
Apple will use the acquisition to help it "differentiate" the company's products in the future. As part of the deal, Intel will still have access to the technology patents involved, but can only use them to develop modems for non-smarpthone devices, such as PCs, smart appliances, and autonomous vehicles.
"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," Intel CEO Bob Swan said in the announcement.
Original Story 7/23:
Apple is always keen to grab more control over the hardware components it relies on. By next week, the iPhone maker could own a business capable of producing the smartphone modems it needs courtesy of Intel.
As The Wall Street Journal reports, Apple is thought to be in advanced talks with Intel regarding the sale of its smartphone modem business. Intel exited the 5G modem business back in April following a deal announced between Apple and Qualcomm to settle its lawsuits and enter a multi-year chipset supply agreement.
Intel fully intends to continue developing 5G technology for connected devices, but no longer has an interest in producing 5G modems for smartphones. Rather than continue to fund the business or go to the expense of closing it down, a sale is on the cards and Apple sees an opportunity. Grabbing a portfolio of patents and engineers experienced at working with 5G hardware looks like a perfect fit, especially when Apple is expected to produce a 5G iPhone next year.
A billion dollars is a lot of money until you realize Apple has $113 billion in cash available to spend. It changes the question from "should we buy?" to "why shouldn't we buy?" considering the potential this offers Apple to control a key component of its smartphones going forward.
The talks could still breakdown, but with Intel's new CEO Bob Swan keen to push the company more into the data center, artificial intelligence, and autonomous driving, a quick sale of a business that isn't generating any profit looks very likely.
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