Earlier this week, reports indicated that Apple was in advanced talks with Intel to acquire its smartphone modem business. And now just days later, Apple officially announced that it is acquiring Intel’s smartphone modem business for $1 billion (Rs 7,000 crore approx).
As a part of the agreement, 2,200 Intel employees will be joining Apple by the end of 2019. Apart from Intel’s talent pool, Apple will also get a hold of nearly 17,000 patents ranging from protocols for cellular standards to modem architecture and modem operation, as a part of the deal. Intel, on the other hand, will retain the ability to develop modems for non-smartphone applications. This means that going forward, Intel will still be able to develop modems, including the 5G modems for devices which includes personal computers, internet-of-things devices and autonomous vehicles.
“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,” Intel CEO Bob Swan said in a statement announcing the news.
Apple rarely spends big bucks on acquring companies, focusing on small startups instead. However, the deal with Intel signifies the companies intensified efforts of decreasing its reliance on Qualcomm, with which it reached a licensing agreement earlier this year that entailed Apple iPhones being powered by the modems created by the chipmaker until 2025 with the ability to extend the contract for up to two years.
The agreement between Apple and Qualcomm, which followed a patent infringement lawsuit, forced Intel to sell its smartphone modem business. Prior to the agreement, Intel had been a majority supplier of modems for Apple iPhones. The company had also been working on developing 5G modems for iPhones, which are not expected to hit the shelves until September 2020.
Meanwhile, Apple too has been hiring engineers to develop modems in a bid to decrease its dependence on other companies and develop all the components in-house. The company already has a division that develops processors for Apple iPhones and iPads in-house.
“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,” Johny Srouji, Apple’s senior vice president of Hardware Technologies said in a statement hinting towards company’s future plans.