Apple in 'Advanced Talks' to Buy Intel's Smartphone Modem Chip Business

[MacRumors]

Apple is now in advanced talks to purchase Intel's smartphone modem chip business, reports The Wall Street Journal, citing people familiar with Apple's plans.

A deal that covers a portfolio of patents and staff valued at $1 billion or more could be established as soon as next week if the talks continue.

Apple and Intel have reportedly been in on and off talks for approximately a year. As reported earlier, the talks ended right around the time that Apple and Qualcomm settled their legal disputes and reached a new supply agreement.

Intel sought other buyers and found other interested parties, but discussions with Apple resumed shortly after they ended.

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 big 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.

As noted by The Wall Street Journal, purchasing Intel's modem chip business would provide Apple with a leg up on its efforts to develop its own modem chips in house, which would ultimately make the company less reliant on Qualcomm.

Apple has been working on developing its own modem chips since at least 2018, but the technology isn't expected to be ready for use in iPhones and iPads for a few years.

Intel in April announced that it was exiting the 5G smartphone modem business, sharing the news just after Apple and Qualcomm announced their new deal. Since then, Intel has been seeking a buyer for its smartphone modem business.

Apple had been planning to use Intel's 5G chips for its 2020 iPhones, but rumors suggested Intel wasn't able to meet design deadlines, souring the relationship between the two companies. Apple now plans to use Qualcomm's 5G modem chips in its 2020 iPhones and has established a deal for chips for future devices as well.

Article Link: Apple in 'Advanced Talks' to Buy Intel's Smartphone Modem Chip Business

 

[MecPro]

Qualcomm maybe flustered! Intel on the SUPER cheap after Apple went with their competitors.

Shrewd business move, Mr Cook!

 

[sniffies]

Aren't Intel chips slower than Qualcomm?

Why not just buy both?

 

[macintologist]

What would Apple name the first chips?

C1
Q1
L1

Any other guesses?

 

[kanki1985]

Very strange. It would be a great use case to see how Apple can succeed with what Intel failed and how..

 

[Bearxor]

I just can’t imagine a scenario here where Apple buys Intel’s modem portfolio and stops paying Qualcomm royalties for theirs.

Yeah, they’ll probably be able to make their own with this acquisition but Qualcomm will get some cash for every chip they make.

 

[needfx]

so much corporate drama, should be adapted to a telenovela

 

[Smeaton1724]

Gives Apple something to bring to the table when negotiating with Qualcomm. The value is in the swathe of patents rather than better than Qualcomm technology.

 

[littyboy]

Aren't Intel chips slower than Qualcomm?

Why not just buy both?

Because Qualcomm's is more expensive. Besides lawsuits between them, Apple does not want to pay that premium.

Although I thought they dumped Intel since Intel was not goin to deliver 5G chips soon enough. I guess the price may be really low.

 

[Fixey]

What would Apple name the first chips?

C1
Q1
L1

Any other guesses?

They plan on calling it the M1,
may have traffic issues tho

 

[Kabeyun]

Makes a lot of sense. One might even argue that Apple foresaw this opportunity catalyze as a result of its settlement with QC. Win win. Klevah.

 

[69Mustang]

Gives Apple something to bring to the table when negotiating with Qualcomm. The value is in the swathe of patents rather than better than Qualcomm technology.

People keep saying that for some reason. I'm sure some of them are valuable, but to say the value is in the patents seems to overstate the quality of the portfolio without knowing what's in it. Google acquired a big ass portfolio of patents from Motorola and it turned out not to be that valuable in the end. To be fair, they acquired the patents primarily as weapons, but the point stands. The patents aren't inherently valuable just because there are a lot of them.

 

[0815]

my guess it is mostly for the patents ... good protector against Qualcomm if Apple does their own modem some day and/or negotiation helper.

 

[now i see it]

the only modems iPhone users want is Qualcomm modems in their iPhones

 

[Tivoli_]

1 billion is much cheaper than the 3 billion they paid for Beats headphones!

 

[magicschoolbus]

Qualcomm pulled a Tim Cook and was essentially in control of Apples flagship product. They took a page from supply chain guru Timmy Cook.

Apple has to buy Intel's modem business for this exact reason.

 

[cmaier]

Smart move

 

[JRobinsonJr]

I just can’t imagine a scenario here where Apple buys Intel’s modem portfolio and stops paying Qualcomm royalties for theirs.

Yeah, they’ll probably be able to make their own with this acquisition but Qualcomm will get some cash for every chip they make.

Makes sense... unless there is some reciprocal licensing involved. At some point "I pay you and you pay me" is a wash.

 

[FFR]

Hahaha i knew it.
Settle with Qualcomm and get intels multi billion dollar modems business (&patents) for pennies on the dollar. Cook must have been planning this since Acquiring Intels lead 5g director in February.

Wonder what Qualcomm gave away to seal the deal and get apple to pay a onetime up front fee.

Can you say no more royalties.

Can’t wait for the intel, i mean apple modem.

 

[apolloa]

Soooo the iPhone would still be crippled with rubbish modems then. Stupid move to make if you ask me.

 

[David1964]

Why keep posting the same thumbnail.

 

[cmaier]

I just can’t imagine a scenario here where Apple buys Intel’s modem portfolio and stops paying Qualcomm royalties for theirs.

Yeah, they’ll probably be able to make their own with this acquisition but Qualcomm will get some cash for every chip they make.

Of course, Qualcomm may need a license from Intel/Apple, too, though presumably some money will still flow towards Qualcomm.

 

[FFR]

the only modems iPhone users want is Qualcomm modems in their iPhones

Hahaha not anymore.

 

[CarlJ]

I just can’t imagine a scenario here where Apple buys Intel’s modem portfolio and stops paying Qualcomm royalties for theirs.

Yeah, they’ll probably be able to make their own with this acquisition but Qualcomm will get some cash for every chip they make.

Yes, Qualcomm will still get some cash (from patent licensing, when Apple eventually starts making their own modem chips), but Apple will gain more control of the hardware they use. They have a long history of being pained by other's control of the hardware/tools they need - most famously when they switched to PowerPC, and then after a few years IBM stopped caring about making faster/better processors that Apple could use. Apple jumped to Intel CPUs because in the Intel pond at least they could get the same options everyone else was getting. Then they started making (yes, not fabbing, but designing) their own ARM CPUs, which does give them nearly complete control over the CPUs they need (for iOS), and now iPhones are shipping with CPUs that are perfect for them, and tend to beat the CPUs the Android manufacturers use quite handily. It's clear that eventually, the Mac will switch to Apple designed processors (I don't expect that any time soon).

Apple did a great job on their ARM chips, if they can do similarly well on modem chips, they can get exactly the modem chips they want, and pay Qualcomm only for patent licensing.

 

[JRobinsonJr]

the only modems iPhone users want is Qualcomm modems in their iPhones

True, but with ownership Apple could potentially streamline and performance tune the Intel chips to run circles around Qualcomm.