Technology 2 min read

Apple Acquires Intel's 5G Modem Business for $1 Billion Dollars

After rumors spread earlier this week that a deal is being cooked between Apple and Intel, the latter finally confirmed that the iPhone maker had acquired its 5G modem business.

Image courtesy of Shutterstuck

Image courtesy of Shutterstuck

Modem chips connect smartphones to wireless network data networks like Verizon and AT&T. Unlike its biggest rivals, Samsung and Huawei, Apple has always relied on outside suppliers for the part. But, that’s about to change.

Aside from releasing its quarterly earnings report on Thursday, Intel also confirmed that Apple is purchasing its 5G modem division.

According to the announcement, Apple paid $1 billion USD for intellectual property, 2,200 employees, as well as other equipment from Intel and leases. That means the iPhone maker would have 17,000 wireless technology patents which range from modems to cellular communication standards.

When the deal is done, Apple could start supplying its own smartphone chips. Intel, on the other hand, will still retain the right to develop modems for non-smartphone applications – for example, self-driving cars and PCs.

In a conference call to discuss the company’s earnings, Intel CEO Bob Swan said:

“Today, we announced the sale of the majority of our 5G smartphone modem business to Apple. This deal preserves Intel access to critical IP we have developed and enables us to focus on the more profitable 5G network opportunity where we are growing and winning share.”

Apple Could Start Making its 5G Modem Chips

Apple has mostly acquired smaller companies in the past, making the Intel deal its second-largest, behind the 2014 Beat Electronics $3.2 billion purchase. The new purchase confirms what analysts have suspected for a while. Apple is trying to have more control over its technological fate – or as it’s now called, the “Cook Doctrine.”

Several past reports suggested that Apple is trying to develop its modem chips. While the Cupertino-based company had never acknowledged these rumors, the recent purchase may have validated it.

In a statement to Reuters, an anonymous spokesperson said that Apple intends to use Qualcomm‘s modem technology for its 2020 5G iPhones. But, the company’s internally developed 5G modem chip could make its debut in the 2021 products.

With that said, any replacement of Qualcomm would happen in phases; the person told Reuters. First, Apple must develop its modems such that it’ll work on all networks and countries using iPhones.

“There’s a fierce desire (at Apple) to have Independence, but they also realize it has to be done responsibly,” this person said.

Read More: Report Claims Apple May Be Boosting its Apps In App Store

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Sumbo Bello

Sumbo Bello is a creative writer who enjoys creating data-driven content for news sites. In his spare time, he plays basketball and listens to Coldplay.

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