Intel just completed its sale of the majority of its smartphone modem business to Apple yesterday. The deal, which was announced middle of this year, costs $1 billion, although Intel claims, as reported in Reuters, the company is still taking its "multi-billion-dollar loss." By owning the modem technology of intel, Apple can now source more components of its connected tech devices in-house instead of turning to outside vendors such as Qualcomm, a company which, according to reports, Apple has a not-so-good relationship.
The deal only includes the smartphone modem business of Intel. This means that the chipmaker will still be developing modems for IoT gadgets, autonomous vehicles, and PCs. In connection to Qualcomm's bitter relationship with Apple, Intel claims that, as indicated in an article on Yahoo! Finance, the former's "anti-competitive patenting tactics forced the sale of its smartphone modem business to the iPhone maker." The company officials have been testifying about this claim in court as part of the ongoing antitrust case of FTC against Qualcomm. A judge ruling has already come out against Qualcomm, but the company appealed the decision as it brought the case to the "9th U.S. Circuit Court of Appeals."
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The Intel–Apple Deal
With the completion of the deal, Apple will now own more of its supply chain and technology stack. More so, it will now be less reliant on third-party vendors "in terms of designing and manufacturing some of the most crucial components of its devices." For quite some time, Apple has been transitioning away from chips considered as the third party since the first release of its iPhone. The first three iPhone models used the Samsung CPUs before their maker revealed its A-series chips so it can have more control over its mobile devices and allow for better performance.
With this, Apple is even speculated that it would phase out the CPUs of Intel in some of its Mac computers, replacing them with the firm's own ARM-based processors. Reuters reported, Intel said via a court filing that as earlier mentioned, it sold its mobile modem business to Apple "at a multi-billion dollar loss." And, other than the smartphone modem business of Intel, Apple acquired the 2,200 employees of the leading chip manufacturer, too, and its equipment and unspecified intellectual property, as well.
Apple to Still Deal with Qualcomm
Despite the so-called bitter relationship with Qualcomm, Apple is still expected to use its modems for its 5G-enabled iPhones in 2020, as part of its six-year agreement for licensing between companies. Moreover, several reports also have it that Apple is planning to develop its own modems for its iPhone units by 2022–2023, and this recently closed deal with Intel will surely be a big help in those initiatives. Meanwhile, the in-house modems of Apple, according to reports, are not expected to be ready for three years.
Meanwhile, as a result of this legal dispute between Qualcomm and Apple, the latter depended on the modems of Intel exclusively for its iPhone Xs. The former claimed it attempted to use the modems of Qualcomm, but it refused to sell them to Apple Apple. Moreover, when Apple used both companies' modems in its iPhone X, it was reported that Qualcomm's hardware provided higher speeds than Intel in spite of the fact that some features on the former's modem has been disabled.
