Apple to Pay $1B For Intel’s Smartphone Modem Business

Earlier this week, we reported that Apple was close to a deal to pick up Intel’s 5G mobile chip business. Now it’s official. Apple revealed yesterday that it would spend $1 billion to purchase the majority of the chip giant’s smartphone modem business in a deal expected to close during the fourth quarter. The acquisition, which will provide Apple with new intellectual property, equipment, leases and about 2,200 Intel employees, should help the company gain more control over the development of wireless tech for its iPhones and reduce its reliance on Intel-rival Qualcomm.

“Combining the acquired patents for current and future wireless technology with Apple’s existing portfolio, Apple will hold over 17,000 wireless technology patents, ranging from protocols for cellular standards to modem architecture and modem operation,” explains the Apple Newsroom. “Intel will retain the ability to develop modems for non-smartphone applications, such as PCs, Internet-of-things devices 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,” said Intel CEO Bob Swan. “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.”

According to analysts, Apple is expected to develop a 5G iPhone by late 2020, which will likely “use chips from Qualcomm, another chip maker that, until recently, was in a legal fight with Apple over royalties and other business practices,” reports The New York Times. “But after that, the business being acquired from Intel will allow Apple to reduce its dependency on Qualcomm.”

“The move also plays into CEO Tim Cook’s so-called Cook Doctrine, his desire to cut out third-party components in Apple products wherever it makes sense to do so,” adds CNBC. “Given the expenses and headaches that come from working with Qualcomm, it makes more sense for it to start making its own modems.”

A faster 5G-capable iPhone could help foster “the spread of [5G] networks across the globe and encourage the adoption of new technologies that run on 5G, such as industrial robots, security cameras, drones and cars,” NYT suggests.