Apple Inc. and Intel Corp. have signed an agreement for Apple to acquire the majority of Intel’s smartphone modem business.
The news comes just a few days after it was reported in the Wall Street Journal that Apple was looking to acquire Intel’s 5G modems.
The deal will include the intellectual property, equipment, leases and about 2,200 Intel employees, all of which is valued at about $1 billion. With the acquired patents for current and future wireless technology with Apple’s existing portfolio, Apple will hold more than 17,000 wireless technology patents, ranging from protocols for cellular standards to modern architecture and modem operation.
While the smartphone technology will be in the hands of Apple, Intel will retain the option to develop modems for non-smartphone applications such as PCs, internet of things (IoT) and autonomous vehicles.
Apple has long been in the business of developing its own internal components, but recently had to go to Qualcomm for 4G and 5G modems. After a dispute involving royalties and licensing, Apple and Qualcomm went to court. That led Apple to go to Intel for 5G modems, but after the dispute was settled and Apple could develop a 5G iPhone more quickly with Qualcomm’s modems, it opted out of the deal with Intel.
As a result, Intel put its 5G smartphone modem business up for sale. With the Intel 5G modem business alongside its own internal development, future 5G iPhones following those introduced in 2020 may be produced using Apple's internally developed 5G modems.
Apple said in a statement that it would use the acquisition to help expedite the development on future products and allow Apple to differentiate from other smartphone vendors moving forward. For Intel, the deal allows it to focus on developing technology for 5G outside of the smartphone business and more to its core strategy of data centers, IoT, autonomous vehicles and networking.
According to Dimitris Mavrakis, research director at ABI Research, the acquisition will not just allow Apple to gain smartphone expertise but also strike better deals with other major 5G patent holders.
“Apple will also potentially be able to negotiate better terms with its current 5G suppliers as well as integrate parts of the 5G modem into its existing processors,” Mavrakis said.
The 5G patents acquired in the deal will also help Apple differentiate its 5G offerings in what will soon be a highly competitive 5G landscape, he said.