WSJ: Apple close to buying Intel modem business

Apple would reportedly pay $1 billion-plus for patents and engineers.

From a story posted after close of market Monday in the Wall Street Journal ($):

Apple is in advanced talks to buy Intel Corp.’s smartphone-modem chip business, according to people familiar with the matter, a move that would jump-start the iPhone maker’s push to take control of developing the critical components powering its devices.

A deal, covering a portfolio of patents and staff valued at $1 billion or more, could be reached in the next week, the people said—assuming the talks don’t fall apart…

Intel and Apple have been in off- and on-again talks for about a year. They broke down around the time Apple reached a multiyear supply agreement for modems with Intel rival Qualcomm Inc., The Wall Street Journal reported in April..

The Apple-Intel discussions began last summer, around the time former Intel Chief Executive Brian Krzanich resigned, people familiar with the matter have said. Mr. Krzanich championed the modem business and touted 5G technology as a big future revenue stream. When Bob Swan was named to that job in January, analysts said the odds of a deal rose because his focus on cleaning up Intel would require addressing the losses in the modem business.

From Evercore’s Amit Daryanani:

We think the rationale (from AAPL’s perspective) to have an alternative solution to QCOM is fairly logical. While it is unclear if AAPL could truly build a scalable 5G modem in-house, we think strategically it is important for AAPL to have multiple suppliers for key components especially given the history of litigation between AAPL and QCOM.

My take. Yup. But there’s many a slip ‘twixt the cup and the lip.

9 Comments

  1. Gregg Thurman said:

    If (and I emphasize the IF) Apple successfully develops its own 5G modem for both CDMA and GSM (I think it will), this will hurt Qualcomm big time. Just don’t look for it in the next 6 years, which is way more time than Apple needs (spring boarding off of Intel’s efforts) to do so.

    On top of that the DOJ has an anti-trust action going against Qualcomm. I think Qualcomm is going to be found guilty, and, as part of the verdict, will be required to license its patent portfolio under FRAND terms (monitored by the Court), making it even easier for Apple to develop an iOS specific modem. Being iOS specific will mean an Apple modem will draw less power than Qualcomm’s general use modems and can be incorporated into Apple’s A Series processors, taking up less internal motherboard real estate, making room for marginally larger batteries.

    Six years.

    4
    July 22, 2019
    • Fred Stein said:

      Yup. Folks get distracted by the 5G hype. Like most new tech, they overestimate the near term and underestimate the long term. Apple play the long game. Apple controls their CPU (as in ARM) destiny. Modem is just one more. Apple use the best foundry, TSMC, so why not own the masks. Long term, 5G is bigger than SmartPhones. You know all this.

      For comparison: LTE is still growing at double digits.

      1
      July 22, 2019
  2. Jerry W Doyle said:

    “… We believe that we need to own and control the primary technologies behind the products that we make, ….” (Tim Cook)

    Apple inherits a humongous portfolio of 5G patents along with Intel’s staff of experts. This is the needed rocket booster for Apple to develop its own proprietary 5G technology for its devices.

    Apple strives to control hardware and software. This is a company that cares about its customers to a degree where its actions often create a bond between brand and consumer.

    Integration is internal at Apple. Apple is not dependent on other companies to turn its vision into products. Vertical integration is such a huge advantage for Apple.

    This news is a continuum of Apple’s vertical integration where Apple desires to own every step of the process. Apple now will control each step in its future modem manufacturing, by owning it.

    Apple will have the propitious advantage of creating its modems “in-house” further enhancing that continuity of Apple effort to provide premium consumer experience in hardware and software under Apple’s tight control.

    Apple pretty much owns the historical track record of superseding the competition (such as it higher performance over competing processors in flagship Android devices) and now Apple will have future modems inside its hardware that will do similarly in setting the performance bar as it does with its chipsets.

    If this deal goes through, then the vision is clearer in our dreams that the humongous legal & settlement costs associated with another legal battle over royalties lies in the happiness and love of knowing Qualcomm is fading fast in Apple’s rearview mirror. Thank you Mac D.

    0
    July 22, 2019
  3. Thomas Fisher said:

    Does Kevin Durant get royalties for the picture above this article?

    1
    July 23, 2019

Leave a Reply