According to The Wall Street Journal, Apple is in advanced talks to buy Intel’s smartphone-modem chip business (Warning: source paywalled; alternative source), “a move that would jump-start the iPhone maker’s push to take control of developing the critical components powering its devices.” From the report: A deal, covering a portfolio of patents and staff valued at $1 billion or more, could be reached in the next week, the people said — assuming the talks don’t fall apart. Though the purchase price is a rounding error for companies valued in the hundreds of billions of dollars, the transaction would be important strategically and financially. It would give Apple access to engineering work and talent behind Intel’s yearslong push to develop modem chips for the crucial next generation of wireless technology known as 5G, potentially saving years of development work.
For Intel’s part, a deal would allow the company to shed a business that had been weighing on its bottom line: The smartphone operation had been losing about $1 billion annually, a person familiar with its performance has said, and has generally failed to live up to expectations. Though it would exit the smartphone business, Intel plans to continue to work on 5G technology for other connected devices. Earlier this year, it was reported that Apple began discussing plans to acquire parts of Intel’s smartphone modem chip business last summer, around the time former Intel Chief Executive Brian Krzanich resigned. “Mr. Krzanich championed the modem business and touted 5G technology as a big future revenue stream,” reports The Wall Street Journal. “When Bob Swan was named to that job in January, analysts said the odds of a deal rose because his focus on cleaning up Intel would require addressing the losses in the modem business.”