Apple’s Chip Independence Plans To Get A Boost By Its $1B Purchase Of Intel Unit

Apple bought a majority stake in the modem business of United States based chip maker Intel, the two companies announced on Thursday. Analysts see this as a major step by Apple and gaining independence in supply of chips for its smartphones. The deal was worth $1 billion.

Apple will take over Intel’s intellectual property, equipment and leases for modem chips along with about 2,200 Intel employees joining the iPhone maker according to the deal. Following the transfer of some of the Intel’s patent rights, the combined number of patents in the field of wireless technology – ranging from cellular communication standards to modems, which Apple will posses would be 17,000 which will make it potent player in the global licensing talks which are likely to happen with major 5G patent holders such as Huawei Technologies Co Ltd.

The deal also mandates that Intel would only have the right to develop and manufacture modems for used for non-smartphone purposes such as in PCs, industrial equipment and self-driving cars.

Modem chips forms an integral part of any smartphone because it connects the phones to the network. Till now, Apple had to rely on outside supply support of modems for its iPhones.  Following a long court battle between Apple and its previous modem supplier Qualcomm over Qualcomm patent licensing practices, Intel virtually became the sole supplier of modem chips for iPhone over the past year.

After a surprise settlement in April between the Cupertino, California-based Apple and Qualcomm which essentially allowed Apple to use Qualcomm chips for its iPhones, Intel had immediately announced that it would be quitting the smartphone modem business.

The Intel deal is the second largest ever for Apple after its purchase of Beats Electronics in 2014 for $3.2 billion. The iPhone maker has mostly focused on acquiring smaller companies.

The ultimate goal of Apple to manufacture its own modem chip would be helped by the Intel deal. The technology and ability of manufacturing modem chips themselves have already been acquired by two of the closest rivals of Apple – Samsung and Huawei.

News of Apple’s efforts to develop its own modem was first reported last year by technology news publication The Information. However that intention has never been officially acknowledged by Apple.

The company wants to control its own technological fate, Apple Chief Executive Tim Cook has also long said. Analysts have called this the “Cook Doctrine.”  “We believe that we need to own and control the primary technologies behind the products that we make,” Tim Cook told investors back in 2009.

Apple would be helped in meeting its aggressive timeline for producing a modem by the phe purchase of Intel’s assets.

According to reports, Apple has plans to make use of modem chips from Qualcomm for its 5G enabled phones in 2020 but intends to be able to use its home made modem chips in some of its products by 2021. There were reports earlier that Intel had planned to get a 5G enabled modem ready by 2020 and therefore the transfer of assets of Intel could help Apple to reach its goal in time.

(Adapted from TheHindu.com)

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