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Apple to pay $1 bn for the Intel-based unit is in the push for chip-independence

(Reuters) – Apple Inc’s (AAPL.O) took a major step forward in the provision of its own smartphone chips with the purchase of the majority of Intel Corp’s (INTC.D) the modem business, in a deal valued at $1 billion, the companies said on Thursday.

FILE PHOTO: The logo of Apple is seen in a shop in zurich, Zurich, Switzerland, on January 3, 2019. REUTERS/Arnd Wiegmann

Under the deal, which is about 2,200-Intel employees will join Apple, along with its intellectual property rights, equipment and leases. In combination with the existing portfolio, and Apple is going to have over 17,000 wireless technology patents, ranging from mobile communication standards, modems, which make it a more powerful player in the global licensing talks, which is likely to take place between the big 5 G patent holders such as Huawei Technologies Co., Ltd.

Intel’s shares rose by 5.7%, to $55.05 after the news of the company’s earnings beat analysts ‘ expectations. Apple’s shares have edged up 0.1% to $207.29.

After the deal, Intel will retain the right to the development of devices for non-smartphone devices such as Pc, industrial, appliances and self-driving cars.

The Modem chips to connect to devices such as the iPhone, wireless data networks, but Apple has always relied on its third-party suppliers for the part. Intel has positioned itself as the sole source of the iPhone’s modem chips in the past year after Apple got into a protracted legal battle with its former supplier Qualcomm Inc’s (QCOM.(O) on Qualcomm’s patent licensing practices.

Cupertino, California-based Apple, which reached a surprise settlement in April that called for the iPhone in order to re-use Qualcomm’s modem chips. Within an hour or two, Intel said it would stop using the smartphone’s modem business.

Apple’s deal with Intel will strengthen Apple’s goal is to have your own modem chip. Two of Apple’s main global competitors – Samsung Electronics Co Ltd (005930.KS) and Huawei – all have the ability to self-supply of modem chips.

Technology news is the publication of The Details of the previous year, reported the company’s efforts to develop its own modem, but the iPhone maker has never been formally acknowledged. In February, Reuters reported that Apple has moved on to the modem’s technical efforts in the same chip design unit that uses the custom processors for its devices, the detection of a doubling down on the pursuit of self-designed modem chip.

Apple Chief Executive Tim Cook has also said that the company wants to control its own technology destiny, which the analysts call it the “Cook Doctrine.”

“We believe that we need to have in order to own and control the primary technologies behind the products that we make,” Tim Cook told investors back in 2009.

TO SPEED UP THE DEVELOPMENT OF

The acquisition of Intel’s assets, should help Apple to meet its aggressive timeline for the production of a device.

A person familiar with the matter said that Apple is planning to use Qualcomm’s modem technologies for 5G, the iPhone will be in 2020, but will have an in-house developed in-5G to modem technology and is ready for use on any of their products, by 2021.

But, as a substitute We have, it is likely to be done in stages, this person said, as an Apple is to build its capacity in order to ensure that the modems work on all of the networks and the countries in which Apple sells the phone. To ensure global compatibility, We have a historic effect, and Apple, still rely on Qualcomm for some of the modems during the transition period to his own devices.

“There is a great desire (for Apple) to have Independence, but they also realize that it needs to be done in a responsible way,” the person said.

Apple’s licensing deal with Qualcomm will be six years old, and its chip supply agreement may also be as long as, he said, a chip-industry veteran who, for anonymity to discuss the sensitive issues. Apple is likely to continue to use the San Diego company’s chips in its high-end models, even if it is in a state of their own silicon for the lower-end and older models, this person said.

Apple is working with taiwan-Global Unichip Corp., a chip design house that Apple supplier Taiwan Semiconductor Manufacturing Co. (5425.ONE is an investor, in order to have a modem design, but it is in the early stages.

“It’s clear that Apple saw the writing on the wall, and as they came around and signed a deal with Qualcomm,” the person said.

Apple declined to comment on the plan, and We have Global Unichip does not immediately respond to a request for comment.

FILE PHOTO: The Intel logo is displayed at the E3, the world’s largest video game industry convention in Los Angeles, California, USA, June 12, 2018. REUTERS/Mike BlakePATENTS AS a LEVER

The most valuable aspect of the Intel’s deal with Apple could turn out to be patent. The sale of a 5G, iPhone, iPhone, Apple needs to strike deals with the major equity holders of the 5 G’s patents, which Nokia NOKIA.HE), Ericsson (ERICb.ST), Huawei, and Qualcomm. Apple’s execution of a licensing agreement with Qualcomm, but it is not known whether they are involved in, rather than with the others.

Ben Robinson, an attorney who had worked in Qualcomm’s licensing business in Asia, said that the patents Apple can make better use of, in licensing talks.

“I don’t think that Intel has quite the portfolio that We have, but it certainly has a large enough impact on the rating if it’s going to be a cross-licensing deal,” he said. “It saves the Stores a huge chunk of change in the cross-license agreements.”

Reporting Munsif Vengattil in Bengaluru and Stephen Nellis in San Francisco; editing by Sriraj Kalluvila and Richard Chang

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