Intel world headquarters

Apple set to acquire Intel’s abandoned modem business

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According to reports in the Wall Street Journal, Apple is close to sealing a deal to acquire Intel’s modem business for $1bn (£800m).

Apple has used both Intel and rival Qualcomm to provide mobile modems for its devices. Earlier this year, it was reported that – following a lengthy legal case – Apple had reached a settlement with Qualcomm, with the result that it would return to using Qualcomm’s hardware (including modems) in iPhones for "multiple years". Unlike Intel, Qualcomm was in a good position to provide a 5G modem in a timeframe fitting with plans to release 5G-ready iPhones in 2020.

Apple used Intel as its sole third-party modem for 2018 iPhones: the iPhone XS, iPhone XS Max, and iPhone XR.

A Telegraph report revealed that in February Apple had successfully poached Intel’s lead 5G modem developer, Umashankar Thyagarajan, marking a major setback to Intel’s modem business.

In April, Intel abandoned its smartphone modem business altogether, announcing that it would instead focus its 5G efforts on network infrastructure and data-centric technology, such as IoT devices. Intel CEO Bob Swan told the Wall Street Journal that the decision was motivated by the agreement between Apple and Qualcomm, admitting that the company “just didn’t see a path” for its mobile modem business.

Now, the Wall Street Journal has reported that Apple has decided to buy Intel’s abandoned mobile modem business for $1bn (£800m). Reports suggest that a deal could be announced as early as next week.

A report by The Information earlier this year suggested that Apple may not have its own 5G modem ready for iPhones until 2025, but gaining Intel’s technology and expertise will accelerate the company's in-house work on mobile modems for future iPhones. The first 5G iPhone is expected to be launched in 2020, using Qualcomm modems.

Apple is slowly working towards developing its own electronics components with the end goal of controlling all of the hardware and software used in its devices. It already designs its own processors, and last year agreed to acquire part of Dialog Semiconductor for $600m (£480m), gaining access to power-management chips that could help boost iPhone battery performance (which has long been compared poorly with other high-end smartphones). With the acquisition of Intel’s mobile modem b business, the only major gap in Apple’s components portfolio will be in memory chips.

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