Monday, July 29, 2019

Apple to get Intel’s Smartphone Modem Business for $1 Billion

Apple announced on Thursday that it has signed an agreement to acquire the majority of Intel’s smartphone modem business. The deal is worth $1 billion and is expected to close in the fourth quarter of this year. Included in the buyout are 2,200 Intel employees joining Apple, patents and other IP, equipment and leases.

Acquiring Intel’s modem business will provide Apple will over 17,000 wireless patents related to modem architecture and operation. Intel is only selling its smartphone modem business here, with the company still having the ability to create modem for non-smartphone devices like PCs, autonomous vehicles etc.

From the report:
“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,” said Intel CEO Bob Swan. “We have long respected Apple and we’re confident they provide the right environment for this talented team and these important assets moving forward. We’re looking forward to putting our full effort into 5G where it most closely aligns with the needs of our global customer base, including network operators, telecommunications equipment manufacturers and cloud service providers.”
By offloading its loss-making smartphone modem business to Apple, Intel would be able to focus its 5G efforts in other areas. Apple and Intel expect the acquisition to complete by the end of this year pending all regulatory approvals.

Intel started supplying modem to Apple with the iPhone 7 in 2016. Before that, Apple had long relied on Qualcomm for its baseband requirements but licensing issues with the San Diego company forced it to look for alternatives. While Intel was able to break into Apple’s supply chain, its modem underperformed when compared to that of Qualcomm. With the 2018 iPhone lineup, Apple entirely switched over to Intel for its modem requirements as its tussle with Qualcomm intensified which saw both companies sue each other in a number of countries.

Obviously this deal will require regulatory approval, but should it pass, Apple will hold over 17,000 wireless technology patents, ranging from protocols for cellular standards to modem architecture and operation. Intel will retain the ability to develop modems for non-smartphone products such as PCs, IoT devices and cars.

What do you think ? 


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