Apple is buying Intel’s smartphone modem business for billion, which will help the company boost its future iPhone and 5G connectivity ambitions. (Image source: Bloomberg)Apple will acquire Intel’s smartphone modem business, confirming earlier reports that the two companies were in talks around this sale. The deal is valued at worth $1 billion and around 2,200 Intel employees will join Apple. The iPhone-maker will also acquire intellectual property from Intel as part of the deal.
While Intel is giving up on its mobile modems, it will still hold the patents for bringing 5G connectivity to other devices like laptops, home appliances and future self driving cars, which are seen as some of the biggest use cases for the next generation of wireless technology.
Intel CEO Bob Swan said, “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.”
“We have long respected Apple and we’re confident they provide the right environment for this talented team and these important assets moving forward,” Swan added.
“We’ve worked with Intel for many years and know this team shares Apple’s passion for designing technologies that deliver the world’s best experiences for our users,” Johny Srouji, Apple’s senior vice president of Hardware Technologies said.
“Apple is excited to have so many excellent engineers join our growing cellular technologies group, and know they’ll thrive in Apple’s creative and dynamic environment. They, together with our significant acquisition of innovative IP, will help expedite our development on future products and allow Apple to further differentiate moving forward,” he added.
For Apple, the Intel acquisition will help boost its 5G ambitions. (Image source: Bloomberg)What has Apple acquired with the Intel smartphone modem deal?
Apple in its press statement said that it has acquired patents for current and future wireless technology from Intel as well. The company now owns a total of 17,000 wireless technology patents in its portfolio. These range from protocols for cellular standards to modem architecture and modem operation.
Will Apple’s 5G iPhone ambitious speed up after Intel deal?
It was previously reported that Apple’s 5G iPhone would only launch in 2020, because at the point the iPhone-maker was involved in ongoing patent dispute with Qualcomm. Intel, which had become the sole supplier for iPhone modems in 2018, was not yet ready with its 5G chipset.
This delay meant that Apple was on the back foot when it came to the new 5G technology. Qualcomm was ready with its 5G modem, and phones like the Galaxy S10 5G, Xiaomi Mi Mix 3 5G variant, and OnePlus 7 Pro in 5G have already hit the market in 2019.
Apple later settled with Qualcomm this year, which is seen as a sign that the first 5G iPhones will use their chipset. But with Apple acquiring the mobile modem business from Intel, it will allow the company to explore its own 5G chipsets for the future, reducing dependence on third-party suppliers.
According to Bloomberg, Apple has been working on its own modem technology for the past couple of years. It has “established development centers, including in San Diego,” for its 5G efforts, according to the report.
With regard to the Apple and Intel deal, this could be a win for both companies, according to Rushabh Doshi, Research Manager for Canalys’ global mobility market research.
“Intel has cashed out a business it announced it will exit, and Apple now has tech that could make it one of the most advanced modem maker. Based on Canalys data, Apple sold 68 per cent of its iPhones via operators like AT&T, Verizon, Vodafone, etc. globally. Having its own 5G, and future wireless IP will always be critical to Apple,” he wrote in an email to indianexpress.com‘s queries.
Intel had announced that it will be quitting the modem business for mobiles earlier this year. (Image source: Reuters)Is Apple-Intel deal bad news for Qualcomm?
For Qualcomm, this could increase some problems, according to the analyst. “This is a blow to Qualcomm, but the impact of it is more long term than short term. Apple’s acquisition of Intel’s model business does give it better negotiating power at the table, and in the long term, Qualcomm will find it harder to dictate terms while selling chips to Apple,” he wrote.
Intel’s failed mobile modem ambitions
Intel had originally planned to launch modems for mobiles with 5G capabilities by 2020. Apple after its legal battle was Qualcomm was using only Intel modems for 2018, but all that is expected to change going forward.
It was even reported that Intel modem chips could be delayed to 2021, according to a report by Fast Company, which would have pushed back the 5G iPhone even further.
The report said that Intel kept missing deadlines for the development of the chip XMM 8160 5G modem, which Apple would need for its 5G iPhone.
“We do not believe [Intel] will be ready with a single chip backward compatible 5G modem, while others like Samsung/Mediatek are unlikely solutions either technically (Mediatek) or practically (Samsung),” UBS analyst Timothy Arcuri wrote had written in a research note at the time.
Then in April 2019, Intel announced it was exiting the business altogether. Interestingly the announcement was made just a few hours after Apple and Qualcomm announced their settlement in the license fee and patent battle.
At the time, the two companies had decided that Apple would make a one-time payment to Qualcomm, along with a multiyear agreement whereby Qualcomm would supply chips and license its technology to the iPhone maker in exchange for royalty payments. As pointed out, the deal helps Intel shed a business that it was struggling with, while it gives Apple more ammunition against Qualcomm, which is the dominant mobile chipset maker in the market.
