Apple Acquires Intel’s 5G Modem Business for $1 Billion

By Joel Hruska

As expected, Apple has IoT devices, autonomous vehicles, and other products — basically, everything that isn’t a smartphone. There’s probably some leeway around tablets or convertibles related to size, OS, or the like as well.

Approximately 2,200 Intel employees will now move to Apple, along with IP, equipment, and leases. The deal is expected to close in Q4 2019.

“This agreement enables us to focus on developing technology for the 5G network while retaining critical intellectual property and modem technology that our team has created,” said Intel CEO Bob Swan. “We have long respected Apple and we’re confident they provide the right environment for this talented team and these important assets moving forward. We’re looking forward to putting our full effort into 5G where it most closely aligns with the needs of our global customer base, including network operators, telecommunications equipment manufacturers and cloud service providers.”

Translation: “Get us the hell out of this market.”

5g-spectrum

5G is being deployed in two distinct sets of spectrum, with very different characteristics.

Selling off its old Infineon modem business is a relief for Intel. The company bought the business unit almost a decade ago, but it’s reportedly been losing a billion dollars a year, and its efforts in both LTE and 5G did not take off. It isn’t clear how Qualcomm’s anti-trust behavior impacted Intel’s modem business. On the one hand, Qualcomm has been found guilty of exploiting some of the same monopolistic tactics Intel was itself accused of exploiting against AMD back in the early 2000s. This may be part of why Intel’s smartphones struggled so hard to find a market. Even if this is true, however, Intel’s rumored failure to meet Apple’s required milestones for 5G modem development is an unrelated issue. Yet Apple just bought the same business unit, IP, and workers that had failed to hit their targets under Intel’s guidance — implying they think the problem can be solved.

One potential reason for this: There’s a longer roadmap to work with now. Apple wanted a 5G modem for the 2020 iPhone, which it can now secure via a new deal with Qualcomm. This gives them several years to bring up a new modem design of their own. That’s solid reasoning, but it’s also reasoning we’ve used before, with Intel directly. Once it became clear that LTE was a mature market, Intel was one of the first companies to start talking about its 5G plans. The reset from LTE to 5G was supposed to give them a leg up on overall product development that doesn’t seem to have happened.

Apple and Qualcomm have a six-year licensing agreement. We’d expect the company to have a modem of its own design ready before that deal expires.

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Posted on: July 26, 2019

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