Apple on Thursday announced it has purchased the majority of Intel’s smartphone modem business. The transaction, valued at $1 billion, will see around 2,200 Intel employees join the Apple fold, along with intellectual property, equipment and leases.
The is expected to close in the fourth quarter of 2019, and is subject to regulatory approvals and other customary conditions, including works council and other relevant consultations in certain jurisdictions. At $1 billion, this is Apple’s second largest known acquisition after Beats. Reports earlier this week had indicated Apple and Intel were in talks to complete the deal.
“We’ve worked with Intel for many years and know this team shares Apple’s passion for designing technologies that deliver the world’s best experiences for our users,” said Johny Srouji, Apple’s senior vice president of Hardware Technologies. “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.”
Once Intel’s intellectual property is combined with Apple’s the Cupertino firm will own more than 17,000 wireless technology patents, ranging from protocols for cellular standards to modem architecture and modem operation.
Intel will still be allowed to develop modems for non-smartphone applications, including PCs, autonomous vehicles, and internet-of-things devices.
“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.”
The Apple-Intel talks are said to have started last summer, around the time that former Intel Chief Brian Krzanich resigned. While Krzanich was a champion of Intel’s modem business, and saw 5G technology as a huge revenue stream for the firm in the future, New leader Bob Swan’s focused on addressing the losses in Intel’s modem business.
Talks between Apple and Intel are said to have been conducted off and on for around a year or so. The talks had ended right around the time Apple and Qualcomm settled their legal battle, reaching a new modem supply agreement. Apple will still likely rely on Qualcomm until its own modem chips are ready to be deployed.