Jul 23, 2019

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

Ina Fried, author of Login

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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