Why Apple bought Intel’s smartphone modem business for $1 billion

Apple has taken the first major step towards supplying its own smartphone chips. The tech giant had expressed its interest in
Intel’s modem business, and both the companies have finally closed the deal at $1 billion. The acquisition will help Apple in acquiring its Intel-owned patents and intellectual property (IP).

As a part of the deal, 2200 Intel employees will join Apple along with IP, equipments, and leases. The combined existing portfolio will help Apple in acquiring total of 17000 wireless technology patents which include cellular communication standards to modems. This deal will help Apple in bolstering its smartphone business goals. Apple has been struggling with
poor iPhone sales numbers.

Apple has invested efforts in developing its own modem but the iPhone-maker never formally acknowledged it. This is among some of the major acquisitions by Apple, in fact the second largest ever deal after purchasing Beats Electronics in 2014.

The deal will accelerate the timeline for producing own modems. Apple had initially planned to use Qualcomm’s modem to get the 5G iPhone ready in 2020. Intel had disclosed plans to develop 5G supporting model by 2020. Acquiring Intel’s assets will help Apple to meet the target for 5G iPhone.

However, any replacement of Qualcomm is likely to happen in phases. The company is building up its ability to ensure that the modems will work on these networks. The global compatibility has been a key strength for Qualcomm. Apple’s will have to rely on Qualcomm technology for sometime.