Apple acquires Intel’s Smartphone Modem Business to access 5G tech

Intel’s attempts to venture into the mobile market have been an unmitigated disaster. After losing to ARM on the CPU front, Intel hoped to gain access to the lucrative market with modems, but over time it became clear that the company couldn’t compete with Qualcomm, despite the desire of industry giants like Apple to move away from Qualcomm products. 

With Intel seeing no future in the smartphone modem business, and Apple’s desire to independence from Qualcomm modems, it is easy to see how a deal could be struck between the two companies. Apple has confirmed that they have signed an agreement with Intel to acquire the company’s smartphone modem business for $1 billion, a business which will come with 2,200 Intel employees and 17,000 patents. 

Intel still sees a future in 5G technology. Their agreement with Apple will enable them to retain the option to develop modems for “non-smartphone applications”, such as PCs, internet of things devices and autonomous vehicles. Intel isn’t leaving the modem market, but their focus is shifting to other devices. 

Apple expects this acquisition to close in Q4 2019, provided the deal received regulatory approval. After this, Apple will start to design its own 5G modems, though the company will likely rely on Qualcomm 5G hardware for the next few years. 

From Apple’s perspective, this deal will enable them to offer tighter integration between their custom smartphone SOCs and their future modems, enabling them to deliver better final products at a lower cost. 

Apple wants to own all the essential technologies that the company requires to operate. This self-sufficiency prevents them from paying accessive royalties to 3rd parties while enabling them to focus the development of their technology on areas which they deem as critical. A recent example of this is Apple’s move to design its own GPUs with recent iPhone SoCs, moving away from Imagination Technologies to become more self-sufficient.