Apple Reportedly in Advance Talks to Buy Intel's Modem Division

Apple tree Reportedly in Advance Talks to Purchase Intel'south Modem Sectionalisation

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Intel may be getting out of the modem business soon if reports are any indication. Just under nine years ago, the semiconductor giant reached a deal with Infineon to purchase its modem business organisation and expand into that marketplace. Now, rumors suggest Intel may sell the unit to Apple.

This isn't the showtime time nosotros've heard rumors of an Apple-Intel deal. The Wall Street Periodical reports that the deal could be valued at "$1 billion or more" when patents and staff are both taken into business relationship. That'due south not very much, relatively speaking. When Intel bought the business unit off Infineon, it paid $1.4B.

At the time, the Infineon purchase was thought to exist essential to Intel'due south plans for its Atom CPU and that processor'south eventual introduction to mobile phones. Obviously, those plans didn't come up to fruition. But in the aftermath of its Atom defeat, Intel kept the mobile business organization and pivoted to 5G — until it wasn't able to evangelize on whatsoever deal information technology had initially signed with Apple.

According to the WSJ, Intel has had little luck finding either customers or buyers for its mobile division. Apple tree, meanwhile, may have signed an understanding with Qualcomm to buy modems for the adjacent few years, but it's been interested in taking control of its own destiny for fifty-fifty longer. Chipzilla has reportedly lost a billion dollars a year on its modem business, and getting the drain off the books has been an issue the new CEO, Bob Swan, has wanted to deal with.

A deal between the ii companies could be announced as early as next week. Apple has been bringing silicon in-house for years, increasing the proportion of the iPhone that it designs and tin, therefore, capture in terms of profits. There's no arguing that the strategy has worked for the company as far equally CPUs SEEAMAZON_ET_135 See Amazon ET commerce and GPUs are concerned; Apple'south products have ofttimes occupied leadership positions in both single-threaded performance and overall GPU performance, though this plainly tin vary from twelvemonth to year depending on the particulars of each design. There's as well no arguing that 5G modems demand major improvements — the first-generation smartphones currently available can't utilise 5G if the ambient air temperature exterior is to a higher place 85F/29C. And range isn't exactly a potent suit.

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5G speed graphed against distance from site depending on intervening objects. Credit: Sascha Segan/PCMag

At the same fourth dimension, nonetheless, new modem technology seems unlikely to set up what ails Apple. The problem isn't with the company'southward modems, but with its design decisions around the iPhone. As the smartphone market matures and sales slump, Apple has doubled down on building hyper-expensive devices. Customers, in turn, have decided to buy fewer iPhones and to prioritize the budget model. The iPhone XR is the near pop device by a wide margin according to Consumer Intelligence Research Partners (CIRP), while Kantar Research reports that Android appears to have picked up 0.vi percentage market share at Apple's expense in the nearly recent quarter. The iPhone 5c/5s purchasing pattern, in which consumers ignored the upkeep model and bought the high-terminate device, has not repeated.

This kind of variation doesn't mean much, in and of itself. Simply Apple tree's iPhone sales have been trending slightly down and the company'southward moves to boost service revenue and increase iPhone prices have been read equally a straight response to that trend. The buzz around the upcoming iPhone family, all the same, has been distinctly negative — more negative than I recall ever seeing before at this signal in the production bicycle.

Whether this reflects how the actual product will state is unknown, simply nosotros do know Apple didn't make its own production targets for the iPhone X. Last calendar month, reports surfaced that Apple may owe Samsung a $90M penalization fee after failing to sell enough iPhone X, XS, and XS Max to justify the investment Samsung Display fabricated into an OLED manufactory exclusively for Apple screens. $90M is chump change to Apple, with its $113B in greenbacks, but it'southward even so not the direction the company wants to move in. Ownership its own 5G modem engineering may not be plenty to change that.

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