The Information reports Apple is considering purchasing the German arm of Intel’s smartphone modem business, citing unnamed sources.
Apple could use the acquisition to begin developing modems for its devices in-house rather than continue paying royalties to chip suppliers like Qualcomm. Apple has been building its own internal team to tackle modems over the past few months, according to The Information, but doesn’t expect to have its own modems ready before 2025.
Intel itself is contemplating how to put its modem business to best use now that the company has formally dropped out of 5G smartphone modem production. Intel acquired Germany-based Infineon’s modem operations in 2011, which has since grown to include 32 global sites employing 7,000 people.
But in April, Intel CEO Bob Swan announced the company was ending its 5G modem production. “It has become apparent that there is no clear path to profitability and positive returns,” Swan said at the time.
The news came as Apple and Intel rival Qualcomm announced they had settled their litigation and that Qualcomm would again be supplying modems to Apple for its iPhones.
In the legal dispute, Apple alleged that Qualcomm abused its position as the primary supplier of cellular chips, and was overcharging for chips, using anti-competitive and monopolistic practices. Indications that Intel’s 5G chips were falling behind schedule and would not be ready in time for Apple’s 2020 5G iPhone launch likely spurred Apple to settle with Qualcomm.
According to various media reports, Apple and Intel held discussions about a possible deal involving Intel’s modem business last year, but the talks stalled. The Information’s report indicates those talks have started up again, but may still fall through.
Qualcomm saw its stock drop 2.8% this morning in light of the news.