APPLE Buys INTEL’s Smartphone MODEM Business in $1 BILLION DEAL

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It is not often apparent to many casual tech users that the branded devices they have are actually made out of components that come from various firms and are put together by the manufacturer whose brand is on the casing. Smartphones, for example, have a lot of internal parts that are either licensed or bought from companies that make them. Qualcomm for instance has its chips being near-ubiquitous in smartphones, Android or Apple iPhones. Qualcomm and Apple actually got into a legal battle since 2017 when the latter switched to using Intel chips due to costly patent licensing from the former. The two have settled, and now Apple has acquired Intel’s modem business for smartphones.

Tech Crunch reports that Apple made an acquisition of the smartphone sector of Intel’s modem manufacturing. The deal, amounting to about $1 billion, was jointly announced by the two companies on Thursday, July 25. As a result, Apple will gain a number of intellectual properties and manufacturing equipment from Intel, as well as building leases and no less than 2,200 employees going to Apple. The IPs gained from the acquisition, expected to be finalized by the end of 2019, will bump up the wireless tech patents under Apple to 17,000.

With the smartphone modem business from Intel now a part of their company umbrella, Apple can have full control in the development of smartphone modems for 5G, or the “fifth generation” of cellular network technology. This means they no longer need to license chip patents from Qualcomm, with which they had had business conflicts since 2017, until settling their differences just this April. Coincidentally, Intel announced its intent to quit development initiatives for 5G smartphones, all but inviting an acquisition for that part of their business. They will however continue modem development for non-smartphone devices like PCs and smart vehicles.

Johny Srouji, SVP for Apple, notes in an official statement that Apple’s working relationship with Intel lets them know they share a passion for tech designs to give users the best device experiences ever. “Apple is excited to have so many excellent engineers join our growing cellular technologies group,” Srouji notes. “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.” Tech analysts opine that, with Intel’s phone modem infrastructure on their side, they can make their own 5G modems within three years, but plans to start hyping their 5G capability as early as 2020.

The Intel deal is also another step in Apple’s new direction under Tim Cook, to ultimately have all device-component manufacturing under the same umbrella, to stop relying on outside companies involving patent licensing and such.

Image courtesy of Tech Lapse

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