Apple is reportedly in “advanced talks” to buy Intel’s smartphone modem business. The deal is pegged to be around $1 billion and would include Intel’s expansive patent portfolio along with the entire modem team.
Intel and Apple have been in discussions about the modem business acquisition since 2018 itself.
The Apple-Intel discussions began last summer, around the time former Intel Chief Executive Brian Krzanich resigned, people familiar with the matter have said. Mr. Krzanich championed the modem business and touted 5G technology as a significant future revenue stream. When Bob Swan was named to that job in January, analysts said the odds of a deal rose because his focus on cleaning up Intel would require addressing the losses in the modem business.
Intel had managed to start supplying Apple with modem for its iPhones and iPads starting with the iPhone 7 in 2016. Apple switched over entirely to Intel for its modem requirements with the iPhone XS series last year as its relationship with Qualcomm worsened.
However, with Intel missing on its promised 5G modem development schedule, Apple was forced to settle its legal dispute with Qualcomm out of the court. As soon as that happened, Intel announced that it is exiting the smartphone modem business entirely. Since then, the company has been looking at prospective buyers for its modem business. It has also been in talks with Apple for over a year, but they have been on and off about this.
With Apple working on its own modem in-house, it would make a lot of sense for the company to pick up Intel’s modem business. Even if one ignores the engineering expertise onboard, Apple would get its hands on Intel’s strong patent portfolio that could come in handy down the line once 5G becomes mainstream.
The modem business has been a loss-making one for Intel which is why it is looking to offload it.