What just happened? Apple and Intel have inked an agreement that sees Apple take over Intel's 5G modem business. This gives Apple yet another component under their control and could give Apple quite an advantage in the 5G market given their success in chip design.
It's official. Following previous rumors, Apple and Intel have signed an agreement that has Apple taking control over Intel's 5G modem business for $1 billion. Under the terms of the deal, Apple will acquire about 2,200 Intel employees as well as additional intellectual property and equipment. The two companies expect to close on the deal by the end of the year pending regulatory approvals.
“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.”
This deal sees Apple in control of its own destiny regarding 5G wireless technology. It will allow them to eventually move completely away from Qualcomm and design their own modems. This will likely save Apple millions in licensing fees. Also, given Apple's overwhelming success with chip design and penchant for vertical integration, it makes a lot of sense and could see Apple with a distinct advantage over its Android counterparts.
Ironically, Apple still has a deal with Qualcomm to use its chips for the next six years following the abrupt settlement to drop all litigation. This is likely due to Apple needing to spin up research and development to properly design the chips they want. Qualcomm's modems consistently outperformed Intel during lab testing by PC Mag. It's going to take work to beat the market leader in cellular modems.
“We’ve worked with Intel for many years and know this team shares Apple’s passion for designing technologies that deliver the world’s best experiences for our users,” said Johny Srouji, Apple’s senior vice president of Hardware Technologies. “Apple is excited to have so many excellent engineers join our growing cellular technologies group, and know they’ll thrive in Apple’s creative and dynamic environment. They, together with our significant acquisition of innovative IP, will help expedite our development on future products and allow Apple to further differentiate moving forward.”
Although Apple is buying Intel's 5G modem business, Intel will still retain the right to "develop modems for non-smartphone applications, such as PCs, internet of things devices and autonomous vehicles."