Apple just bought the majority of Intel's smartphone modem business

In a press release today, Apple announced it has purchased the majority of Intel’s smartphone modem business. The sale is valued at approximately $1 billion.

As part of the sale, some 2,200 Intel employees will now become Apple employees. Apple will also now own multiple pieces of intellectual property related to smartphone modems as well as physical equipment and leases.

This news is an interesting development for the relationship between the two companies but hardly should come as surprising. Once Intel announced it was exiting the smartphone business and would auction off many of its smartphone-related patents, it seemed inevitable that Apple would scoop at least some of them up.

However, don’t expect an Apple-made smartphone modem to appear in an iPhone anytime soon. In the interim, Apple has a six-years-long deal in place with Qualcomm, so the next few batches of iPhones will still have Qualcomm hardware.

In the future, though, the majority of iPhone networking hardware could be made by Apple in-house. The company already makes its own smartphone processors, the most recent of which is the A12, available in the iPhone XR, iPhone XS, and iPhone XS Max.

Apple and Intel tried to band together to have the latter produce smartphone modems for the former. However, numerous setbacks and Apple’s disappointment with the quality of Intel’s output caused much friction between the two tech giants. With 5G on the horizon and Intel ill-prepared to deliver a 5G iPhone modem, Apple had no choice but to cease all litigation against Qualcomm and agree to buy its chips.

This $1 billion cash injection is likely the best outcome Intel could have hoped for.

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