Apple buys Intel modem business in $1B deal
Apple has signed a deal to acquire the majority of Intel's cellular modem patents, intellectual property and key personnel in a deal valued at $1 billion, furthering the tech giant's plans to take ownership of iPhone's communications stack.
As part of the deal, Apple will get over 17,000 wireless technology patents. The portfolio spans cellular standards, modem architecture, modem operation, and chip engineering.
"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."
Intel will retain the ability to develop modems for non-smartphone applications, such as PCs, internet-of-things devices and autonomous vehicles.
"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."
The transaction is expected to conclude before the end of 2019.
For the 2018 iPhone releases, the iPhone XS, iPhone XS Max, and iPhone XR did not include Qualcomm modems at all. For Intel, this meant it was providing all of the modems destined for use in all three models for that year.
Intel and Apple have been in negotiations for the patent portfolio for some time. The negotiations were interrupted when Apple settled with Qualcomm and signed a new multi-year supply deal. At the same time, Intel announced it was abandoning work on 5G phone modems.
Apple is believed to be developing its own 5G modem under senior hardware VP Johny Srouji, with an expected 2022 premiere. In the interim the company will likely use Qualcomm parts and will nearly certainly use them in the predicted 2020 5G iPhone.
As part of the deal, Apple will get over 17,000 wireless technology patents. The portfolio spans cellular standards, modem architecture, modem operation, and chip engineering.
"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."
Intel will retain the ability to develop modems for non-smartphone applications, such as PCs, internet-of-things devices and autonomous vehicles.
"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."
The transaction is expected to conclude before the end of 2019.
Apple, Intel, and Qualcomm
After a period with the iPhone using Infineon modems, Qualcomm was the sole supplier of iPhone modems for Apple up until the iPhone 7. With the release of the iPhone 7, Intel became one of two suppliers for the iPhone modem, alongside Qualcomm. Supplies were split along carrier lines between the two sources through the iPhone 8 and iPhone X releases in 2017.For the 2018 iPhone releases, the iPhone XS, iPhone XS Max, and iPhone XR did not include Qualcomm modems at all. For Intel, this meant it was providing all of the modems destined for use in all three models for that year.
Intel and Apple have been in negotiations for the patent portfolio for some time. The negotiations were interrupted when Apple settled with Qualcomm and signed a new multi-year supply deal. At the same time, Intel announced it was abandoning work on 5G phone modems.
Apple is believed to be developing its own 5G modem under senior hardware VP Johny Srouji, with an expected 2022 premiere. In the interim the company will likely use Qualcomm parts and will nearly certainly use them in the predicted 2020 5G iPhone.
Comments
I just don't understand why YET.
All will be known soon fellas!!
Yeah motion detection and fingerprint sensing but Apple goes above and beyond their acquisitions wildest possibilities. We never imagined ApplePay, Sign in with Apple and Animoji. Don't think Apple will be on stage and just say "By the way, we make our own modems now" and move on to the next announcement.
My mind can only comprehend some possibilities for now:
The worlds fastest 5G system on chip in the world. May even be in it's own class and chip.
Pretty standard stuff but I think Apple can have the worlds fastest wireless communications network planted into all their products. A chip in all new devices that allows you to pay a monthly fee to have all your iCloud devices connected online. iPads, Airpods, Homepod, Glasses, Watch.
"knowing what you can do (in real-time)"
BINGO!! This is exactly what I was talking about. This will certainly give Apple more control of what's possible. Apple will not just buy these patents, toss a 5G chip on iPhone and call it a day. Intels tech is lacking after all but Apple thinks it's worth 1B for reasons we don't understand yet.
Intels modem business was failing and far behind. This is why I said I don't understand YET.
Apple never buys a dying business they don't think they can innovate. Remember Primesense? They were dead and nobody wanted anything to do with them. Heck Xbox sales were tanking because Microsoft was bundling Kinect with their Xbox! So Microsoft dropped the bundle to save sales lol. Yet Apple bought them....
Intels CPU chips are also slowly falling behind. Which makes me wonder if Apple is ready to acquire that business too.
In few years we will see Apple cellular performance better than competitors as they evolve the design and integrate modern into their SOC.
The keyword here is... patent.
I tried to express this point in the other but you said it better.
Really what are patents worth but a metaphorical bag of insults in court? Anyone can copy your patents and still beat you in court. Although Qualcomm is shi*ing their pants right now.
But it seems this package also comes with engineers and cooperation.
"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,"
Seems like Apple saw something good happening at Intel but Intel was lost(remember Xerox?). I can imagine the gist of the deal was something like:
Intel: We're really struggling to make a profit here. We have no idea what to do and we're losing a billion a year.
Apple: Will you sell your business? I have some ideas.
Intel: Let's do this!
No the keyword here is...patient.
With time and patience Apple will do good things with these modem patents in the future. If Intel's CPU business starts to sink so will their value. Allowing Apple to come in and swoop the rest on a discount and do even greater things with their patents.
There’s such a thing as continuity. If key people leave, then everything will slow down to a crawl. it isn’t about hiring new engineers, it’s about having these engineers. If Apple just wanted the IP, it’s very likely that that’s what they would have negotiated for.
Some of the new employees don't like Apples directions.
This deal is very similar to Beats.
1. It was expensive for an Apple acquisition. 2nd most expensive next to Beats.
2. Apple seems to have bought them to speed up current plans.
3. Employees working on a solution ahead of Apple are part of the package.