Apple has to protect the 5G modem chips for the iPhone and the surprise deal with Qualcomm which offers Apple a multi-year chip supply agreement with the chip maker. Apple has already bitten the hand that feeds it once when it testified against Qualcomm’s controversial chip-selling practices against Korea’s FTC. At that time, Apple was receiving its modem chips exclusively from Qualcomm and was earning an incentive of $1 billion each year. But Apple’s testimony and decision to also use Intel’s modem chips in the iPhone 7 led to a legal dispute between Apple and Qualcomm once the latter stopped cutting those $1 billion checks.
Now that Apple and Qualcomm are taking over, Apple wouldn’t dare bite that hand again, right? Well, The Information reports tonight that Apple is in talks to buy the smartphone-based modem chip operation from Intel based in Germany. This fits perfectly with the claim that Apple wants to develop its own modem chips so as not to be indebted to another company for this crucial part. Remember, Intel announced its intention to abandon the 5G mobile modem business on the same day that Apple and Qualcomm announced their agreement. In April, it was reported that when Apple was desperately searching for a 5G modem chip source, it decided to explore the possibility of buying Intel’s mobile modem chip unit. It seems that these conversations have never ceased.
Apple could have its own modem chip in 2025
With the deal, Apple will also select a large number of engineers skilled in the smartphone segment of Intel’s modem chip industry. This could be seen as a victory for Apple if the deal falls. It is not known how much Apple would pay Intel for operations, but it could be one of the biggest acquisitions made by Apple. Right now, buying $3 billion of Beats Audio in 2014 is Apple’s biggest purchase. In general, the technology giant deals with smaller teams operating in a niche market and quickly uses the innovations it acquires. For example, in 2012, it bought the AuthenTec biometric firm for $356 million and the following year the company’s technology was used to present the Touch ID fingerprint scanner in the iPhone 5s. In 2010, Apple purchased Siri, a company that offered a limited virtual assistant app in the App Store. The following year, the iPhone 4s introduced the native Siri assistant on iOS. In 2015, Apple bought the Israeli company LinX for about $20 million which helped Apple improve video cameras on the iPhone.
Rumors that Apple was designing their own modem chips for the iPhone dated back to November 2018, and a report last month said we might not see Apple’s modem chips inside an iPhone until 2025, four years later than originally thought. Apple already designs the SoC Ax used to manage iPhone, iPad and iPod touch. The chip is actually produced by TSMC. Apple should launch an iPhone 5G in 2020.
A person allegedly informed of the agreement between Apple and Intel states that it will include patents and Intel products. Meanwhile, Qualcomm investors see this news as a threat to the company’s future profits. When this story exploded after the closing of the 4 pm EDT of the US stock market. Qualcomm shares fell 1.8% to $69.98. It was a roller coaster ride for Qualcomm investors, as the stock rose from $55.90 on April 11 to $ 89.29 through May 3 thanks to the strength of the agreement with Apple. But after a negative judicial decision that could force Qualcomm to change the way it sells the chips; the stock fell to $ 65.37 and has since tried to recover.
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