Apple is officially acquiring Intel’s smartphone modem business for $1 billion, the two companies announced today. As rumored earlier this week, the move “would jump-start the iPhone maker’s push to take control of developing the critical components powering its devices.” The Verge reports: The acquisition means that Apple is now well on the way to producing its own 5G modems for its smartphones, rather than having to rely on Qualcomm for the hardware. Developing its own modems has the potential to deliver big benefits for Apple. In particular, it would no longer be subject to the patent licensing terms of Qualcomm, which were the source of the two companies’ lengthy legal dispute. In the past, Apple has accused Qualcomm for charging “disproportionately high” fees in patent royalties, which it was accused of forcing companies to agree to if they want access to its hardware as part of a “no license — no chips” policy.
The talks with Intel to acquire its modem business are understood to have started last summer, according to the WSJ, when Intel’s new CEO Bob Swan arrived with a focus on cleaning up the company and addressing its loss-making segments. Acquiring another business to develop an in-house competitor is a tactic Apple has used at least once before when it spent $300 million to acquire part of Dialog, a company that previously supplied Apple with power management chips for its phones. The time of the acquisition, which included 300 employees, was Apple’s biggest ever in terms of headcount.