Apple is in advanced negotiations to buy Intel’s smartphone modem chip business for at least $1 billion, according to a report by The Wall Street Journal.
Intel announced in April that it would retreat from 5G phone modems, and Apple apparently wants to absorb the company’s talent and intellectual property to develop such chips on its own.
Apple has been purchasing Intel’s chips for iPhones since 2016, looking to limit its dependence on fellow U.S. supplier Qualcomm, with which it had a dispute over royalties. But Intel struggled to find other major customers, as it mainly focuses on chips for computers and data centers.
“For Apple this would be a clear ‘doubling down’ on 5G, which remains at the centerpiece of the company’s smartphone future, with these chip assets giving Apple further control over its supply chain and core chip design,” said Dan Ives, managing director at Wedbush Securities.
Intel’s decision to exit the money-losing business came hours after Apple and Qualcomm settled the royalty dispute. Qualcomm agreed to supply Apple with 5G modem chips for iPhones to be sold in 2020. For now, Apple will seek to catch up with Chinese and South Korean rivals’ 5G phones by sourcing from Qualcomm.
But buying the operations from Intel would allow Apple to keep its options open and fashion its own chips in the future.
The WSJ’s report on Monday said the Apple-Intel talks could reach a conclusion over the coming week. Intel declined Nikkei’s request for comments, while Apple did not immediately respond.―Nikkei Asian Review