Apple Considered Smartphone Modem Acquisition From Intel: Report

Apple’s supply deal with Qualcomm, in which the companies entered a six-year patent license agreement as well as a multiyear chipset supply agreement, may have put the brakes on the discussions.

Prior to reaching a new supply deal with chip maker Qualcomm, Apple reportedly discussed buying a portion of Intel's smartphone modem business.

Previously, while Apple and Qualcomm were locked in a legal dispute, Apple began exclusively using Intel's cellular modems starting with the 2018 iPhone lineup. But that appears to be changing after a deal this month that has Apple and Qualcomm entering a six-year patent license agreement, as well as a multiyear chipset supply agreement.

[Related: Apple-Qualcomm Settlement Sets Stage For A 5G iPhone Next Year]

The deal also may have put the brakes on modem acquisition discussions between Apple and Intel.

Beginning last summer, and ending "around the time" of Apple's agreement with Qualcomm, Apple held talks about acquiring part of the smartphone modem business from Intel, according to a Wall Street Journal report.

However, Intel may still seek to sell its modem chip business to Apple, or to another buyer, the report said. It's unclear how interested Apple would be in acquiring the business given its deal with Qualcomm. The agreement has included a one-time payment by Apple of an undisclosed amount to Qualcomm—estimated by a UBS analyst at between $5 billion and $6 billion.

Still, Apple has a lengthy history of chip design, and "having more and more components under their own roof would make them more in charge of their own design destiny, timing and launches," said one executive at a solution provider partner of Apple, who asked to not be identified.

Intel declined to comment on the Wall Street Journal report, and Apple did not immediately respond to a request for comment.

An Intel spokesperson referred CRN to a previous statement from Intel CEO Bob Swan: "We are very excited about the opportunity in 5G and the ‘cloudification’ of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns."

Intel is pulling out of the 5G modem business following the Apple-Qualcomm deal, and Intel's leaders are "assessing our options to realize the value we have created," Swan said in the previous statement.

According to reports, Intel had been the only 5G modem supplier for the 2020 iPhones but had missed upcoming deadlines this summer for delivering sample parts of its 5G modem. Fast Company reported earlier this month that Apple had "lost confidence in Intel to deliver the chip."

Prior to the Apple-Qualcomm agreement, which ended all litigation between the two companies, evidence had been mounting that Apple wanted to develop its own iPhone modems.

A December report in The Information about a modem project within Apple was followed by a February report from Reuters, which indicated Apple had shifted modem engineering from its supply chain unit into its own hardware division.