Intel CEO explains why it sold its 5G modem business to Apple

By

Intel CEO Bob Swan
Intel CEO Bob Swan.
Photo: Intel

Intel CEO Bob Swan has shed a bit more light on the deal in which Apple spent $1 billion buying Intel’s modem business.

Speaking with CNBC, Swan said the company decided to sell its 5G mobile modem business because selling modems to Apple only would not have provided big enough returns. Intel was due to produce Apple’s 5G modems before Apple patched things up with Qualcomm.

Almost immediately that deal was announced, Intel said it was getting out of the modem business. At the time, Bob Swan said that it had, “become apparent that there is no clear path to profitability and positive returns.”

He elaborated on this point in a recent interview. “We concluded that in the modem for the smartphone, where we really only had one customer, that the likelihood and the probability that we were going to be able to make money was just not there as we look forward in light of the dynamics of the market,” Swan said.

Intel’s not throwing in the towel on 5G

As part of the recent deal with Apple, Apple will absorb Intel’s patents, equipment and about 2,200 Intel employees. The two companies hope to close the deal by the end of the year.

In the new CNBC interview, however, Swan says that Intel isn’t throwing in the towel on 5G altogether. It may still develop 5G technology for other areas. “We doubled down on 5G networks where we think there’s real opportunities and last week we announced the sale of the 5G smartphone modem to Apple,” Swan said. “But we also retained access to the technologies in the event that we need a 5G modem for non-smartphone applications, like a PC or an automobile.”

The deal to buy Intel’s modem business is Apple’s second biggest acquisition in history. However, as I noted recently, the $1 billion sum still pales in comparison with other big tech sales.

Apple aims to debut its first 5G iPhones in 2020.

Source: CNBC