Apple to acquire the majority of Intel's smartphone modem business in a transaction valued at $1B
Johny Srouji https://www.apple.com/... Benjamin Mayo / @bzamayo : Intel Inside 2200 is a lot of people wow Matthew Panzarino / @panzer : The relevant Tim Cook quote is, of course, “We believe that we need to own and control the primary technologies behind the products that we make.” (2009 earnings call) Dieter Bohn / @backlon : Apple V Qualcomm modem fight is going to be Super Fun. https://www.theverge.com/...
Context & Ripple Effects
This deal closed out a year-long negotiation arc: Apple first held talks with Intel starting last summer before they halted this spring, then narrowed to Intel's German modem operations in June (The Information's report), and finally advanced to a $1B+ agreement covering staff and a patent portfolio just days ago. Today Apple confirmed it is buying the majority of Intel's smartphone modem business.
The strategic driver is vertical integration: Tim Cook's long-stated principle that Apple must "own and control" its primary technologies, and Fast Company reports that owning Intel's modem team gives a big boost to efforts to integrate a modem directly into Apple's SoCs — work led by chip chief Johny Srouji. The backdrop is Apple's escalating fight with Qualcomm over modem supply.
First-order effects
- Apple gains roughly 2,200 engineers plus a portfolio of wireless patents, converting a supplier relationship into in-house silicon capability under Johny Srouji's hardware team.
- Intel exits smartphone modems entirely; by November it disclosed in a court filing that it sold the business at "a multi-billion dollar loss", blaming Qualcomm for forcing it out of the market.
Second-order effects
- Qualcomm loses one of only two merchant customers for phone modems as Apple moves toward designing its own — Dieter Bohn flagged that an "Apple V Qualcomm modem fight" is now direct competition rather than litigation over supply.
- Wearables become a nearer-term beneficiary: Fast Company argues an integrated modem may be crucial for future Apple wearables, where external modem chips are hardest to accommodate.
Third-order effects
- If the integration succeeds, smartphones shift further toward single-vendor system-on-chip designs with radios folded in, shrinking the merchant market for standalone baseband suppliers to Android handset makers.
- Intel's multi-billion-dollar write-off sets a precedent for how Qualcomm's licensing-and-chip model can price rivals out of segments entirely — a dynamic regulators weighing the Apple-Qualcomm dispute will have to account for.
The trend: Smartphone leaders are absorbing their last external radio suppliers in-house, as Apple's buyout of Intel's modem unit turns Qualcomm from indispensable vendor into direct competitor.