Cupertino and Santa Clara, California, Apple is buying the majority of intel smartphone modem business for $1 billion. The two company announced today that approximately 2,200 Intel employees will join Apple, along with intellectual property, equipment, and leases. Apple will also acquire IP and equipment from Intel as well.
The transaction is expected to close in the fourth quarter of 2019, subject to regulatory approvals and other customary conditions, including works council and other relevant consultations in certain jurisdictions. Both the companies have decided to combine the 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.
Intel will retain the ability to manufacture modem for non-smartphone applications, such as PCs, internet-of-things devices and autonomous vehicles. The acquisition means that Apple has now well involved in producing its own 5G modems for its smartphones, rather than having to rely on Qualcomm for the hardware. Apple recently resolved its long-running dispute with the chipmaker, and when they resolved, Intel without wasting any time announced that it would be exiting the 5G phone business as a direct result of the settlement.
Moreover, Apple SVP of hardware technologies Johny Srouji said that this deal will help in the development of our future projects and allow Apple to move forward. Developing its own modems would help Apple to made modem technology at its own pace, and also better integrate modems with its products, will develop new features that set its devices apart.
It is the strategy which Apple has taken when it comes to smartphones and tablet processors, and it will eventually be led to advancement to put its chip ahead of other industries. The acquisition will automatically reduce Apple’s reliance on Qualcomm, the dominant supplier of smartphone modems. In the past, Apple has accused Qualcomm of charging “disproportionately high” fees in patent royalties and forcing companies to agree to if they want access to its hardware as part of a “no license, no chips” policy.
Because of this dispute, Apple relied on Intel’s modems exclusively for its iPhone XS. Apple claimed that it tried to use Qualcomm’s modems, but that the company refused to sell them to Apple. For quite a while Apple has been in work to develop its own modems. Last December, job listings emerged that suggested that the company was working on its own networking hardware out of its Santa Clara and San Diego offices.
Apart from that Apple recently announced plans to hire 1,200 more employees in the city. Purchasing another business to develop its own in-house competitor is a tactic Apple used on some other businesses as well.