Along with the financial results of the second quarter, Intel announced that they would be selling the majority of their smartphone modem business to Apple. The entire transaction is worth $1 billion, and it includes equipment, leases and the transfer of around 2000 employees to the latter. This would be Apple’s second-largest acquisition since 2014 when they purchased Beats Electronics LLC. Intel’s profit reportedly dropped by 17% in the second quarter due to weaker demands in China where trade tensions with the US have slowed down business.
It was disclosed that Apple would hold around 17,000 wireless technology patents and this would allow the company to develop its own modem IP without having to depend on Intel’s or Qualcomm’s. Intel will still have the option to produce modems for areas surrounding IoT, PC and autonomous vehicles.
Apple’s senior vice president of Hardware Technologies, Johny Srouji mentioned:
“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.”
For Apple, developing a 5G chip on its own would have been an intimidating task. On the other hand, this agreement enabled Intel to continue focusing on the infrastructure and baseband side of 5G, all while retaining their intellectual property and the technology itself. Both the companies have been benefitted by this deal.
Intel also held a patent auction recently, and whether this fortune includes that as well is unclear. This deal is expected to close in the fourth quarter after it has completed its journey in the pipeline of regulatory approvals and conditions.