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Home / Apple / Apple pays $ 1 billion for a portion of Intel's modem business

Apple pays $ 1 billion for a portion of Intel's modem business



SAN FRANCISCO – Apple said Thursday that they would buy most of Intel's $ 1 billion smartphone modem business and help their pressure to gain more control over faster wireless technology in iPhones.

Apple will add around 2200 Intel employees, as well as patents and equipment. The agreement is expected to be concluded in the fourth quarter and is subject to government approval.

Analysts say Apple will develop a 5G iPhone by the end of next year. These iPhones are expected to use pieces from Qualcomm, another tile manufacturer that until recently was in a legal battle with Apple for royalties and other business practices.

But after that, the business purchased from Intel will allow Apple to reduce it's dependence on Qualcomm.

An iPhone that can run on 5G networks, which offers speeds much faster than current wireless connections, can have major consequences. A 5G iPhone can push the spread of such networks across the globe and encourage the adoption of new technologies running on 5G, such as industrial robots, security cameras, drones and cars.

The transaction also gives Apple its first major portfolio of wireless patents, giving it exploitation in future license negotiations with Qualcomm and other patent holders.

In April, Apple and Qualcomm settled an annual long dispute. Although companies are now on better terms, Apple has long sought to take more control over the critical parts of their devices.

Gene Munster, a longtime Apple analyst and a partner in the securities firm Loup Ventures, said that Apple's A huge cash pile, around $ 225 billion, was a smart move for Apple.

"It makes a lot of sense, given that they ultimately want to replace Qualcomm's chips, and this is the fastest way to do so," he said.

Qualcomm is Intel's most important competitor in the smartphone modem industry, which is critical chip that helps phones connect to wireless networks.

For Intel, the transaction ends a long-standing saga of mistakes in cell phone technology that began in the late 1990s. The company first tried and failed to become a major supplier of chips that provide computing capabilities in phones, as it does on personal computers.

Then the Intel shifted the focus to compete in so-called baseband modems, pieces that manage mobile communication phones. This effort began in earnest after announcing in 2010 an agreement to buy Infineon's wireless billing business for $ 1.4 billion.

This company had delivered baseband chips to the first iPhones, but later lost its business to Qualcomm. Intel won it later in the midst of Apple's legal quarrel with Qualcomm over patent royalties.

Intel never made money on baseband chips and showed little chance of doing so after Apple and Qualcomm settled the differences. Robert Swan, who was appointed Intel's CEO in January, announced plans to leave the business the same day.

Apple buys Intel business that employs 4000 people in Munich, Germany; Linz, Austria; And San Diego, California, Intel said they were trying to keep or find external jobs for as many employees as possible.

Intel announced the transaction along with financial performance in Q2, which was better than analysts had predicted. The company's shares jumped 6 percent on the news in afternoon trading.


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