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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.

Under the deal:

  • About 2,200 Intel employees will join Apple.
  • Apple will also acquire many of Intel's cellular-related patents, along with some leases and equipment.

The deal had been widely anticipated, though, after that settlement. The day the deal was signed, Intel announced it was ending plans to develop a 5G modem chip and weighing the future of its modem chip business.

With Apple being the only major customer for a standalone modem chip, it didn't make sense for Intel to keep going in the business. (Most phone makers either make their own modem chips or use an integrated processor and modem from Qualcomm.)

Yes, but: Qualcomm will still have Apple's modem business for a while, thanks to the multiyear chip deal it signed as part of the legal settlement. It will also take Apple's in-house team a while to get its own 5G modem chips ready.

Separately: Intel posted quarterly results that exceeded expectations and raised its full-year earnings estimate. Its stock price rose in after-hours trading.