Apple could buy Intel’s modem business, report says

Apple has considered buying Intel’s smartphone modem business in what would be one of the iPhone maker’s biggest acquisitions ever.

That’s according to a new story in the the Wall Street Journal, which reports that the two companies have held talks since last year, though those conversations recently “stalled.” 

From the report:

Intel is now exploring strategic alternatives for its modem chip business, including a possible sale—to Apple or another acquirer, the people said. It has already received expressions of interest from a number of parties and has hired Goldman Sachs Group Inc. to manage the process, which is in an early stage. Should there be a deal, it could yield as much as a few billion dollars for Intel, some of the people said.

A multibillion dollar acquisition would be one of Apple’s largest (the current record for the company is its $3 billion Beats acquisition) and would have significant ramifications for the iPhone. Apple has been working on its own chips for some time, but gaining Intel’s patents and engineers could help them accelerate those plans. It could also help insulate Apple in the event of another legal dispute or other supply issue. 

In the past, Apple has relied on modems built by both Qualcomm and Intel. But Intel was the only supplier for the iPhone XS and XR due to Apple’s long-running legal battle with Qualcomm. The two companies finally reached a settlement earlier this month, though, and Intel revealed just hours later that it would abandon its plans for a 5G modem.

Qualcomm’s modems have also historically been superior to Intel’s. Apple famously throttled iPhone 7 models with Qualcomm chips in an effort to prevent major disparities between those and the slower Intel-equipped phones. And Intel’s 5G plans were reportedly a huge, slow-moving mess. 

Now that Apple does have a multiyear agreement with Qualcomm in place, it’s not clear if such a large acquisition with Intel would even be worth it for Apple. 

Even if it doesn’t, the fact that Apple considered it tells us a lot about their plans for future iPhones.