Apple announced on Thursday that it has agreed to acquire a majority stake in the Intel smartphone modem division. According to the statement, 2,200 Intel employees will join Apple. Apple paid $1 billion for Intel employees, intellectual property and other devices. The transaction is expected to be completed in the fourth quarter. Intel CEO Bob Swan said in a statement, "This agreement allows us to focus on developing technology for 5G networks while retaining the key intellectual property and modem technologies created by our team."
Intel currently provides modems for Apple's iPhone, enabling it to connect to carriers such as Verizon and AT&T. But in April of this year, Intel announced plans to withdraw from the smartphone modem market. Swan said at the time that this was because Intel "has no clear profit and a positive return."
Apple is Intel's only modem customer. But earlier this year, as part of a patent licensing agreement, Apple agreed to buy Qualcomm chipsets "for many years," which analysts believe will provide Qualcomm with chips for future iPhones, including versions that may support 5G networks in the future.
Media reports and job postings show that Apple is building its own 5G chipset. Analysts say that the intellectual property it acquired from Intel will be critical to this effort.
Prakash Sangam, founder of research and consulting firm Tantra Analyst, said in an interview that "Apple realizes that this is not just another chip - it is a strategic intellectual property of networked devices. This is one of the key strategic intellectuals they don't have, and it makes sense to have it."
Wedbush analyst Dan Ives wrote in a report on Monday, "For Cupertino, this is clearly 'double bet' on 5G. 5G is the future of the company's smartphones At the core, these chip assets enable Apple to further control its supply chain and core chip design."
Johny Srouji, senior vice president of hardware technology at Apple, said in a statement, "Apple is pleased to have so many outstanding engineers join our growing cellular technology team. Together with our major acquisition of innovative intellectual property, there will be Help accelerate the development of our future products and allow Apple to further differentiate in the future."