Jul 23, 2019

Apple in talks to buy Intel's $1 billion modem business

Photo: Alex Tai/SOPA Images/LightRocket/Getty Images

Apple is reportedly once again in talks with Intel to buy the company's troubled cellular modem business for around $1 billion.

Why it matters: Although Apple recently settled its legal dispute with Qualcomm, the company is widely believed to be interested in developing its own modem capabilities internally and has already hired people from both chipmakers, including at a new office in San Diego.

  • Such a transaction could give Apple access to both patents and the specialized workers needed to eventually design its own modem chips for the iPhone.
  • The Wall Street Journal reported on Monday that the talks are advanced and a deal could come this week.

Between the lines: Intel is in something of a bind. Apple is really the only big customer for standalone cellular modems, but its deal with Qualcomm likely means Intel's business will dry up.

  • That helps explain why, the day Apple and Qualcomm announced their settlement, Intel said it would cancel planned 5G modem chips and re-evaluate the business.

Our thought bubble: It's hard to imagine anyone other than Apple being interested in acquiring the business. The only other likely outcome — Intel shutting the unit — would have downsides for both companies.

  • Intel, of course, would get no return on its expensive investment. Apple could still hire people, but it would have to do so one by one, and it wouldn't get Intel's patents.

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Apple to buy Intel's cellular modem business

Illustration: Rebecca Zisser/Axios

Apple on Thursday agreed to buy the majority of Intel's smartphone-modem chip business for $1 billion.

Why it matters: Apple will get to control more of its own supply chain. It's also a disappointment for Qualcomm, which is just now getting back Apple's modem business after settling its long-running legal dispute with the iPhone maker.

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Apple's growth areas rely on its shrinking iPhone business

Apple's new iPhone-powered credit card, Apple Card, launches next month. Photo: Apple

With its latest earnings numbers, Apple proved once again that its growing services and wearables businesses can help lead the company to record financial results even as iPhone sales fall short of prior years.

Why it matters: This strategy is a creative way to manage through a maturing smartphone market, but Apple's business is arguably just as dependent on the iPhone as it has ever been, perhaps more so, because these new businesses are tied at the hip to the device.

Go deeperArrowJul 31, 2019

Apple earnings top estimates even as iPhone sales sag

An iPhone with Apple's forthcoming credit card. Photo: Apple

Apple reported earnings and revenue ahead of estimates Tuesday as weakness in the iPhone business was offset with growth in wearables.

Why it matters: Apple has been leaning on those newer businesses amid weakness in the smartphone business, but it's still critical for Apple to keep customers on its mobile platform in order to build its services market.

Go deeperArrowUpdated Jul 30, 2019