One thing everyone knows about Apple is that it is a company that always does things in its way. Apple just announced that they have bought the majority of Intel’s cellular modem business.
The contract between two companies has been signed for $1 billion. Through this contract, Apple bought Intel’s modem through which they will acquire IP and equipment from Intel and almost 2,200 employees of Intel will join Apple.
The transaction is most likely to be closed in the fourth quarter of 2019.
Is Intel’s Modem business going to shut down?
As Apple bought Intel’s modem but that doesn’t mean Intel is leaving the modem business entirely.
Intel will still develop modems for different devices which are not smartphones.
It’s an Apple move. While many mobile maker companies use someone else’s operating systems, mainly Google Androids but Apple integrate their hardware and software to create an optimum user experience.
The contract was done just after few months leap after settling a legal battle with Qualcomm. Qualcomm is Intel’s main competitor. Qualcomm has been one number modem supplier for Apple devices.
Why Intel made this decision?
Intel is a company that creates its modem arm out from Infineon’s wireless business.
They started their business almost a decade ago. Intel’s biggest competitor is Qualcomm, who is the main supplier of modem in smartphones and other devices.
It never won over its rival in the smartphone space. Qualcomm was a modem supplier for Apple but after a long legal battle between the two companies, things changed.
Apple will begin iPhones shipping with Intel modems. Qualcomm was sued for patent infringement. Intel decided that they would exit the 5G smartphone modem business as a result of dropping of litigation in April.
According to Apple:
If we, according to Apple’s current portfolio, combine the acquired patents for current and future wireless technology, ranging from protocols for cellular standards to modem architecture and modem operation, Apple will have more than 17,000 wireless technology patents. On the other hand, Intel will still develop modems for non-smartphone devices. That means they are not leaving the modem industry entirely.
Intel’s CEO Bob Swan during the conference said:
We will be focusing on developing technology for the 5G network with the help of this agreement. While we will retain the technology our team has created for modem and critical intellectual property. The needs of our global customer base, including network operators, telecommunications equipment manufacturers and cloud service providers, we are looking forward to giving our all to 5G which will closely align us with them.
Apple has been designing more and more parts of iPhones itself over the years.
It’s long-standing and deeply held philosophy of end-to-end integration of all aspects of a product is a part of Apple buying Intel’s modem.
It will always do something extra to give a superior user experience. By doing this they improve its profit margins on each device.
CPUs and GPUs on Apple’s mobile devices are developed by Apple.
It is expected that in the few coming years for its favor It will drop Intel’s desktop processors.
That means Apple will develop cellular models itself too.
Once the transition is done, it will take control of its hardware. But we won’t be getting a 5G iPhone based on Intel’s technology soon.
Apple’s first 5G iPhone will rely on Qualcomm. But the agreement with Intel will make it easier for Apple to move out of the dependence.
For the future of iPhones, Apple will make its path in the 5G era by acquiring Intel’s business.
Apple will be building its chips and other components so that they can reduce its dependence on third-party partners and vendors.