Following the news according to a Wall Street Journal report, Apple has now confirmed signing agreement with Intel to take over its 5G Modem business for US 1Billion. The deal will see Apple purchasing Intel’s tech, patents, and staff.
Apple recently came to a multi-million dollar settlement with Qualcomm, its current smartphone modem vendor. Qualcomm and Apple are rivals, though. Qualcomm hardware powers Android flagships like the Galaxy S10, OnePlus 7 Pro, and Google Pixel series. Because Apple doesn’t currently have the ability to make its own 4G/5G modems, it is forced to source these from Qualcomm.
Intel Biz Acquisition Will Boost Apple’s 5G Modem R&D
Johny Srouji, Apple’s senior vice president of Hardware Technologies said in an official press release that, “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. 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.”
In a separate communication, Intel CEO Bob Swan said, “We have long respected Apple, and we’re confident they provide the right environment for this talented team and these important assets moving forward. 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.”
For some time now, though, Apple has been working on developing its own 5G modem technology. This will help Apple stop buying Qualcomm modems as they will be available inhouse lowering material purchase costs further streamlining iPhone makers entire manufacturing process in-house.
Apple is known for handling everything from chip design to retail in-house. Smartphone modems are one of the few areas it is still dependent on an external vendor. According to JP Morgan predictions, in-house modems are one of several changes we might see in the 2020 iPhone.
How important is the Intel purchase, though? Intel hasn’t created a mature 5G modem product yet. However, its modem division has a tremendous amount of research experience. Intel also has a number of patents on specific aspects of modem design. By acquiring the people and patents, Apple could advance its own modem R&D efforts by several years.
This is What the Wall Street Journal Reported Prior to Intel Acquisition:
“It would give Apple access to engineering work and talent behind Intel’s yearslong push to develop modem chips for the crucial next generation of wireless technology known as 5G, potentially saving years of development work. Apple has been working to develop chips to further differentiate its devices as smartphone sales plateau globally, squeezing the iPhone business that has long underpinned its profits.”
There is another view about Apple continuing to buy Qualcomm modems for some more time till the newly acquired facilities start offering them which is anticipated not earlier than at least 2021.
As for Intel, the deal sees them exiting the modem business related to smartphones, entirely. However, it will continue to develop modems for non-smartphone applications, such as PCs, internet of things devices, and autonomous vehicles. Intel announced its exit from the modem business just hours after Apple settled its legal dispute with Qualcomm.
In the wake of Apple’s dispute with Qualcomm, Intel was expected to become Apple’s vendor of choice for 2020 smartphone modems. However, Intel’s own work on modems was not market-ready. The scramble to get a 5G product ready in time for the 2020 iPhone put a massive strain on the company and hurt relations between it and Apple. Once the Qualcomm dispute blew over, Intel saw little reason to remain in the modem business.
Now with Intel exiting 5G modem business, we expect Apple’s in-house modems to arrive sooner than later.