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Apple to Buy Intel’s Modem Business for $1 Billion

This story has been updated to include a statement from Intel that some of its San Diego employees will be included in the transaction.

Apple Inc. will acquire the majority of Intel’s smartphone modem business in a deal valued at $1 billion, the two companies announced on July 25. The deal would give Apple the patents and workforce to develop its own modems, a key piece of technology that allows smartphones to connect to a cellular network.

The news isn’t exactly a surprise. In April, after Apple and Qualcomm settled more than two years’ worth of lawsuits against each other, Intel announced it would shutter its 5G smartphone modem business. Intel had been working on a 5G modem for Apple that was expected to appear in smartphones in 2020 or 2021.

Though Qualcomm now appears to be providing 5G modems for Apple after the two companies struck a six-year licensing and chip supply agreement, the Cupertino-based company may look to make its own components in the future. Apple already makes its own system-on-a-chip (SoC) processors, which it could integrate with its own modem chips.

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Of course, building a modem takes a lot of time, intellectual property and talent. Apple will get the latter with the deal. It will bring on 2,200 Intel employees, along with more than 17,000 wireless technology patents, and the needed equipment and leases. An Intel spokesman confirmed that some of the company’s employees in San Diego would be included in the deal, though he would not specify how many.

It’s also worth noting that Apple appears to be scouting for several wireless engineers in San Diego, where it plans to open a 1,200-person campus.

“Apple is excited to have so many excellent engineers join our growing cellular technologies group, and know they’ll thrive in Apple’s creative and dynamic environment,” Johny Srouji, Apple’s senior vice president of hardware technologies, said in a news release. “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.”

Intel, for its part, will still develop modems for applications outside of smartphones, such as its PCs, internet-of-things devices and autonomous vehicles. Intel CEO Bob Swan said the deal would allow the company to focus its 5G efforts, and emphasized that the company would keep the needed IP and modem technology to do so.

“We’re looking forward to putting our full effort into 5G where it most closely aligns with the needs of our global customer base, including network operators, telecommunications equipment manufacturers and cloud service providers,” Swan said in a news release.

Apple and Intel expect the deal to close in late 2019, subject to regulatory approval.


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