Apple has reached an agreement to buy the majority of Intel’s smartphone modem business. In a deal worth $1bn, expected to be completed at the end of the year, over 2,000 Intel employees will be transferred to Apple, along with intellectual property, equipment and leases.
Combining patents for current and future wireless technologies with its existing portfolio, Apple will take on 17,000 wireless patents, including protocols for cellular standards and modems. But Intel will still be able to make modems for non-smartphone applications, such as desktop computers and autonomous vehicles.
“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,” Intel chief executive Bob Swan said in a statement.
He added: “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.”
The ability to develop its own smartphone modems could deliver huge benefits for Apple, reducing its reliance on Qualcomm, the current dominant supplier in this market. It would allow the company to design more Apple-specific technologies, better integrated with its existing products, and to develop new exclusive Apple-only features.
As it stands, Apple already designs the main processors for its mobile devices and is planning to eventually do the same for Mac computers. The company has also built its own graphics engines, wireless chips and is considering moving into customised batteries.
In 2017, Apple took legal action against Qualcomm, accusing it of charging “disproportionately high” fees in patent royalties. But the two companies settled on a six-year patent licensing agreement in April. In time, it’s expected the new deal with Intel will replace this.