Apple dropping a cool $1 billion on Intel's smartphone modem business

Cloud money

When you are a supplier for Apple, the iPhone-maker’s moves can have a huge impact on your business. If Apple makes a change to one of its design and no longer needs a supplier, it can pretty much ruin that supplier overnight. For example, when Apple stop doing business with a sapphire glass supplier, that company literally went bankrupt.

And so, with all of that said, the folks over at Qualcomm must be chugging Pepto-Bismol tonight. Why? Because it makes modems for Apple’s iPhone, and Apple is buying a smartphone modem business from Intel for a billion dollars. In other words, if this acquisition works out, Apple may soon no longer need Qualcomm for modems.

"Apple and Intel have signed an agreement for Apple to acquire the majority of Intel’s smartphone modem business. Approximately 2,200 Intel employees will join Apple, along with intellectual property, equipment and leases. The transaction, valued at $1 billion, is expected to close in the fourth quarter of 2019, subject to regulatory approvals and other customary conditions, including works council and other relevant consultations in certain jurisdictions," says Apple.

The iPhone-maker further says, "Combining the acquired patents for current and future wireless technology with Apple's existing portfolio, Apple will hold over 17,000 wireless technology patents, ranging from protocols for cellular standards to modem architecture and modem operation. Intel will retain the ability to develop modems for non-smartphone applications, such as PCs, internet-of-things devices and autonomous vehicles."

Johny Srouji, Apple’s senior vice president of Hardware Technologies provides the following statement.

We've worked with Intel for many years and know this team shares Apple's passion for designing technologies that deliver the world's best experiences for our users. 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.

Apple’s acquisition of Intel’s modem business should be a win for both consumers and Apple investors. Apple should eventually save money by developing modems in house, which will hopefully lead to quicker innovation in consumer devices such as iPhone, iPad, and Apple Watch -- including 5G.

Photo Credit: Andy Dean Photography/Shutterstock

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