Apple aims at chip independence as it acquires Intel’s smartphone modem business for $1 billion

Apple's big learning from $6 billion settlement with Qualcomm is becoming more self-dependent for mobile chips. The Cupertino-based iPhone maker had formed a partnership with Intel but couldn't prevent derailing of its 5G plans. With rivals Huawei and Samsung already gaining 5G pace, Apple is looking at course correction with its latest acquisition. Apple on Thursday announced it is buying Intel's smartphone modem business, valued at $1 billion. The deal is expected to close in the fourth quarter of 2019.

As per the deal, more than 2,000 Intel employees will now work for Apple. Apple has also secured over 17,000 wireless technology patents which range from cellular standards, modem operation to modem architecture. The patent acquisition is likely to put Apple back in race with Huawei which is also a major 5G patent holder globally. Two of Apple's biggest global competitors - Samsung Electronics Co Ltd and Huawei - already have the ability to self-supply modem chips.

The deal also marks a formal end to Intel's short-lived efforts to build smartphone modems. Interestingly enough, Intel had announced exiting mobile 5G race shortly after Apple and Qualcomm announced their agreement. Intel, however, will continue to build modems for non-smartphone applications which range from Internet of Things to self-driving cars and industrial equipment.

"This agreement enables us to focus on developing technology for the 5G network while retaining critical intellectual property and modem technology that our team has created," said Intel CEO Bob Swan.

"We have long respected Apple and we're confident they provide the right environment for this talented team and these important assets moving forward. We're looking forward to putting our full effort into 5G where it most closely aligns with the needs of our global customer base, including network operators, telecommunications equipment manufacturers and cloud service providers," he added.

It is more or less confirmed that Apple will be unable to launch a 5G iPhone this year. According to reports, Apple will continue to use Qualcomm chip for 5G iPhones next year. But the company is looking to phase out Qualcomm chips gradually. The internally developed 5G modem is expected to launch by end of 2021. Apple is also in talks with TSMC-backed Global Unichip Corp to design modems.

(With inputs from Reuters)