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Home / Apple / Apple closes one billion dollars to buy Intel's modem business: report

Apple closes one billion dollars to buy Intel's modem business: report



  Apple CEO Tim Cook.
Enlarge / Apple CEO Tim Cook.

Patrick T. Fallon / Bloomberg via Getty Images

Apple is in the final stages of negotiations to buy most of Intel's fashion branding business, The Wall Street Journal reports. The journal says that the deal, valued at $ 1

billion or more, may be terminated within the next week. The agreement involves transfer of talent as well as modem-related patents.

Intel's wireless effort goes back to at least 2011, when the company bought Infineon's $ 1.4 billion wireless division. Intel hoped to become a major rival for Qualcomm, which has long played a dominant role in the wireless chip market.

But Intel has struggled to gain traction. It is partly because Qualcomm negotiated restrictive contracts with potential Intel customers who effectively blocked them from considering another provider. After Apple began sending iPhones with Intel chips inside it in 2016, Qualcomm declared war against Apple and sued for patent infringement and ultimately refused to provide chips for new iPhone models – making Apple dependent on Intel for these chips.

But Intel apparently struggled to develop 5G wireless chips in time for them to be included in Apple's upcoming 2020 iPhone model. So in April, Apple decided its extensive legal war with Qualcomm. Apple's decision to make peace with Qualcomm obviously ruined Intel's chances of making its modem business economically viable, as Intel later announced it was leaving the 5G modem business.

Next month, a federal judge decided that Qualcomm had engaged in nearly 20 years of competitive behavior to maintain its dominant position in wireless chip operations – behaviors that damage the prospects of competing competitors like Intel. In theory, the ruling should have given Intel's chip business a boost, but Intel does not seem to have much appetite for renewing the chip bet. Instead, it is alleged that Intel is looking to relieve its employees and patents from its modem efforts for Apple.

Apple's efforts to buy Intel's chip business are an extension of Apple's broader strategy of developing as many components as possible internally. Obtaining Intel's modem switch division can help Apple make itself self-sufficient in modem printing. Apple has already made some progress in this direction by building a significant office in San Diego, the Metropolitan Area where Qualcomm is headquartered, and where Intel did much of the wireless chip work.

Making their own modems can have technical benefits for Apple, allowing the company to integrate its modem chips more with other iPhone components. It can also protect Apple in case a court of appeal overturns the antitrust decision of May against Qualcomm. If that happens, we can expect Qualcomm to once again use aggressive licensing and litigation techniques to recover large royalty payments from customers, so it would be in Apple's interest to be able to produce its own wireless chips.

Correction: Intel bought Infineon's wireless division in 2011, not the entire company.


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