Another expensive acquisition for Apple

Apple’s plan to develop its own modem in-house is heating up, as the company has confirmed speculation that it will acquire Intel’s smartphone modem business for around $1 billion.

According to people familiar with the matter, this is hardly a new development: discussions between Apple and Intel began last summer, roughly around the time that Intel’s former chief, Brian Krzanich, resigned. It has been a difficult time for Intel – the company fell out of the race to develop 5G, and Apple instead inked a six-year deal with modem-maker Qualcomm in April (after the two companies settled a longtime court case).

Intel’s new boss, Bob Swan, is apparently looking to “clean up” Intel and is addressing the losses in its modem business. Cue Apple for a swift acquisition.

The price of $1 billion might seem high for a failing modem business, but Apple is thinking both big and longterm here. A deal with Intel would not only bring in the company’s entire modem team, but also Intel’s extensive patent portfolio. This would be a huge asset in Apple’s development of a smartphone modem in-house.

Apple’s latest licensing agreement with Qualcomm is a six-year deal so its clear the iPhone-maker is looking ahead – well beyond the iPhone 12 or 13. Heck, Apple could even be looking beyond the iPhone itself: an in-house modem would of course benefit the cellular iPad and Apple Watch, but it could also usher in the release of an LTE-equipped MacBook – something that’s been rumored for years.

With Apple already developing an array of chips in-house, it makes sense to design and develop a smartphone modem in Cupertino. Anything that reduces over-reliance on external suppliers is a big benefit to Apple, and it looks as though we’ll see it developing its own cellular modems before long.