There are media reports that Apple Inc. (NASDAQ:AAPL) is in negotiations to buy Intel Corp.’s (NASDAQ:INTC) cellular modem unit.
The potential deal is said to give Apple key engineering talent and patents that would help it develop new devices to connect to the mobile Internet. The Intel assets that Apple is negotiating to buy are said to be worth $1 billion U.S.. An agreement could be reached as soon as this week.
The Apple/Intel negotiations were first reported in The Wall Street Journal. Apple has announced that it is currently building its own cellular modems for devices such as the iPhone, iPad and Apple Watch so that it can reduce its reliance on buying parts from companies such as Qualcomm Inc. (NASDAQ:QCOM)
Apple’s latest iPhone models use modems sourced exclusively from Intel. The company settled its long-standing royalty lawsuit with Qualcomm in April of this year amid plans to sell 5G iPhones in 2020. Apple’s licensing and royalty agreement with Qualcomm ends in six years and Apple appears to want to replace the Qualcomm parts with modems that it develops internally.
A deal with Intel could be like Apple’s agreement to pay Dialog Semiconductor $600 million U.S. to take over its power management business, the provider of another key component of Apple devices. Intel currently provides modems for Apple’s 4G LTE iPhones.
