Back in April, Intel confirmed it would be exiting the smartphone modem business. Almost immediately, there were rumors that Apple would be buying up what was left.
Now, months later, and the rumors refuse to die. Before the end of June, Intel launched a massive patent auction, but it didn’t take long before the company pulled back the public sale and reportedly started discussions with a single potential buyer. At the time, that buyer was rumored to be Apple.
Now, The Wall Street Journal is helping to shed some light on what’s going on, basically confirming that Apple is in “advanced talks” with Intel to buy up the company’s smartphone modem business to a tune of $1 billion. The goal on Apple’s side of things appears to be to save itself from years of development processes, something that Intel has already handled and Apple can build out from:
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. It has hired engineers, including some from Intel, and announced plans for an office of 1,200 employees in San Diego.
And for Intel, this is all about removing a part of its business that has been weighing it down for years, impacting the company’s bottom line:
For Intel’s part, a deal would allow the company to shed a business that had been weighing on its bottom line: The smartphone operation had been losing about $1 billion annually, a person familiar with its performance has said, and has generally failed to live up to expectations.
The report indicates that a deal could be finalized before the end of July, but plans could also change. It also indicates that Apple and Intel were discussing this path even before Apple and Qualcomm reached a landmark settlement, ending litigation between the two companies and basically securing 5G modems from Qualcomm in 2020.
Interestingly, the talks between Intel and Apple broke down following the announcement of the Qualcomm settlement. However, the report indicates that because Apple is the “most logical buyer”, the talks resumed soon after.
There is speculation swirling around that Apple is developing its own cellular modem, and the acquisition of Intel’s patents and other important pathways towards that goal would certainly help the company. But nothing is official yet, and, just as it was noted in the original report, the talks could fall through again.
Still, it certainly sounds like Apple is on the cusp of a major buy in the coming weeks.