Apple’s purchase of Intel phone modem biz is a done deal

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Intel and Apple have formalized a deal that has the iPhone maker producing its own smartphone modem.
Photo: Thomas Hawk/Flickr

Intel Corporation says it has completed a $1 billion sale of most of its smartphone modem business to Apple.

The deal goes down as Apple’s second-biggest acquisition in its 42-year history. Apple will absorb patents, equipment and roughly 2,200 Intel workers.

Intel is not entirely out of the modem business. The company will focus its attention on developing technology for 5G networks and modems for non-smartphone applications, including PCs, smart home products and autonomous vehicles, Intel said in a brief statement published this morning on its website.

Selling made sense for Intel, which had Apple as its only customer for smartphone modems. The iPhone 11 series runs on Intel’s 4G modem.

The companies announced the impending deal in July, shortly after Apple and chipmaker Qualcomm patched things up following a drawn-out legal battle over patent licensing fees. Apple paid Qualcomm $4.5 billion to settle that dispute.

Intel lost billions on smartphone modems

Intel invested billions of dollars over the last decade on its smartphone modem tech. It struggled to get a foothold in the chip business because of Qualcomm, according to The Motley Fool’s Evan Niu. Intel lost billions selling its smartphone modem biz to Apple.

In a story published last week, Niu quoted Intel’s general counsel Steven Rogers: “Intel suffered the brunt of Qualcomm’s anticompetitive behavior, was denied opportunities in the modem market, was prevented from making sales to customers and was forced to sell at prices artificially skewed by Qualcomm.”

Intel CEO Bob Swan told CNBC over the summer that “the likelihood and probability that we were going to … make money was just not there as we look forward in light of the dynamics of the market.”

Observers expect an Apple-built 5G modem to power 2020 iPhones.