Apple buys Intel’s phone modem business in $1 billion deal

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This Intel modem will likely power the first 5G iPhone.
This modem may soon bear the Apple name.
Photo: Intel

Apple will pay $1 billion to acquire Intel’s smartphone modem business in a deal that was announced by the two companies this afternoon..

Apple will absorb patents, equipment and about 2,200 Intel employees if the deal meets regulatory approval. The two companies hope to close the deal by the end of the year.

Today’s announcement came after more than a year of talks between Apple and Intel.

Apple-Intel deal: the back story

Apple was in a prolonged legal battle with its main modem supplier Qualcomm and recently switched over to Intel tech for the iPhone XS.

Apple and Qualcomm eventually settled several patient infringement lawsuits. At the same time, Intel announced it would get out of the smartphone modem business.

Apple, reportedly looking for ways to develop its own modem, entered talks with Intel in hopes of ending its costly dependence on Qualcomm chips.

The deal means 2020 iPhones will likely have 5G modems produced in-house.

“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,” Apple hardware Vice President Johny Srouji said in a written statement. “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.”

Intel will continue to develop modems for the 5G network, including PCs, smart home devices and autonomous vehicles.

Intel CEO Bob Swan said in an interview with Yahoo Finance this week that his company wasn’t making a lot of money with smartphone modem. Apple was its only customer.

“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,” Swan said in a statement released by Apple. “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.”