Apple in advanced talks to buy Intel’s modem chip business for $1 bn

Apple is in advanced talks to buy Intel’s smartphone-modem chip business, The Wall Street Journal reported.
Apple iPhone in Japan
The likely size of the deal, covering a portfolio of patents and staff, would be around $1 billion or more.

Apple will be able to advance the launch of 5G smartphones with the proposed acquisition of the ailing business from Intel. At present, Apple does not have any 5G smartphone launch plans in its strategies for the year.

Intel announced it would exit the 5G modem chip business in April, hours after Apple settled a legal dispute with world’s largest chip maker Qualcomm, a key supplier of iPhone modem chips, Reuters reported.

Intel purchased its wireless modem business in 2011 from Infineon Technologies for $1.4 billion.

Intel’s smartphone operation had been losing about $1 billion annually. Though Intel would exit the smartphone business, Intel plans to continue to work on 5G technology for other connected devices.

Intel is expected to report second-quarter results on July 25, while Apple is scheduled to report its third-quarter earnings on July 30.

The proposed deal would give Apple access to engineering work and talent behind Intel’s push to develop modem chips for 5G. Qualcomm is the dominant player in the 5G modem business at present.

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.

Apple’s deal with Qualcomm — previously the sole supplier of iPhone modems — was the main highlight of the resolution of a legal fight between the two US technology companies over royalties Qualcomm collects for its wireless technology.

Intel is the latest Apple supplier to exit a business after the iPhone maker moved to develop components in-house. Apple last year agreed to a $600 million deal to buy 300 engineers and facilities from Dialog Semiconductor as the company increasingly develops the battery-management chips Dialog had supplied.