Apple May Pay $1 Billion for Intel's 5G Modems for iPhones (Update: They Did)

iPhone XS Max
The 4G iPhone XS Max.
(Image credit: Future)

Editors' Note: This article was originally posted July 23. Today (July 25) Apple and Intel made it official, as Apple will pay $1 billion to acquire most of Intel's smartphone modem business. As part of the deal, Apple gets Intel's intellectual property and equipment along with 2,200 employees. After the deal was announced, Apple said it now holds more than 17,000 wireless technology patents. You can read the original report below or jump to an analysis of why Apple is spending $1 billion of Intel's modems.

Apple is well known for making its own A Series processors, such as the A12 Bionic on the iPhone XS and iPhone XS Max. And now the company may be taking the same approach with modems.

The Wall Street Journal reports that Apple is considering buying Intel’s smartphone modem arm, and is quite far along in talks to make a deal. This would give Apple a shortcut to creating its own 5G chips for future iPhones.

Apple initially used Qualcomm modems in its iPhones, but after the two companies had a falling out over accusations of exorbitant licensing fees and stolen patents, Apple worked with Intel during the two years the litigation went on for to continue developing technology.

When the legal case was settled, and Apple moved back to working with Qualcomm. Intel then announced it was selling off its modem business, since its major customer was now returning to its previous partner.

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For consumers, this likely means one thing: 5G iPhones. Intel and Apple poured a lot of time and effort into developing 5G modems, which is part of the reason industry experts have expected this acquisition by Apple for a while.

It may take a few years for Apple to ramp up production, with chips not even ready necessarily for the iPhone in 2020. Apple will likely partner with Qualcomm for bringing 5G to the iPhone next year.

But Apple would eventually have control over the production of its own modems, something it’s already achieved with processors, graphics and battery management chips on its phones.