The river sounded, and indeed, water carried. Apple announced a few hours ago the acquisition of much of the mdems business for Intel smartphones for 1,000 million dollars.
The agreement includes a portfolio of 8,500 patents and a staff of 2,200 Intel employees. Precisely that patent catalog is one of the key elements of that acquisition, and now it remains to be seen if Apple is able to develop competitive chips in a market dominated by Qualcomm. Intel, meanwhile, lets out another mobile segment in which he never succeeded (and there are already a few).
Apple pursues such an agreement for years
In 2009 Tim Cook an was not too well known outside the Apple scene. However, he already pointed out ways when they gave him the opportunity. With Jobs still alive he held a conference with investors after the presentation of tax results and made a particularly relevant comment.
Cook said that he and the people in charge of Apple "believe that we need to be owners and control the primary technologies that are behind the products we manufacture. "
That appointment has been confirming the Philosophy of a relentless companyAt the time of first developing its own processors (the Apple A4 was the first of a triumphant lineage), then its graphics processors (after abandoning the agreement with Imagination Technologies) and now, apparently, its own 5G modems for its future iPhone and iPad
The Cupertino firm already created an office in San Diego near Qualcomm last year, but also hired former Qualcomm and Intel employees for its own division and finally taking the final step to reach an agreement with the first to end the long legal battle that both have.
I can imagine how this negotiation went.Intel: How about $ 10 billion? Apple: Well give you $ 2 billion.Intel:Apple: (Settles with Qualcomm, yanks the rug out from under Intel.) Its now $ 1 billion. Take it or leave it.Intel: Deal.https: //t.co/8ZYWHEJRC1
– Kyle Wiens (@kwiens) July 25, 2019
That agreement precipitated the events, since Intel lost the negotiating power it had during the litigation. He could have pressed Apple to get a better price for your modem division during that legal battle, but once the situation was resolved, it changed for Apple, which was able to push down.
The price of 1,000 million dollars is not bad, but it seems of course much better for Apple than it was a few months ago – Intent to perform this operation last year – when his dependence on Qualcomm was more pronounced. The first iPhone 5G to appear in 2020 will use the company's modems, although Samsung could also participate in those components according to Ming-Chu Kuo, a specialized analyst.
Intel loses another mobile battle
In fact, the division that Apple has bought from Intel is the same as Intel had bought Infineon in 2011 for $ 1.4 billion: The accounts do not seem to have gone out to this company, which once again loses battles in the field of mobile phone.
Meanwhile, Apple prepares that transition to its own modems. Bloomberg already pointed it out in November 2018, and this movement gives the reason for a strategic purchase that the Cupertino company will give the control over a fundamental component of your mobile devices in the future.
Here is curious how Intel has sold most of its mdems business to Apple, which has kept the part dedicated to other products: continue developing these chips, but to allocate them to computers, IoT devices and autonomous cars.
Intel's new failure in this sector is unique: the company abandoned the development of ARM chips with the sale of XScale, they did not reach an agreement with Apple to provide their x86 chips on the iPhone -That could have changed everything- and they have never managed to attack a segment in which ARM designs have evolved so noticeably that they now threaten desktop computers.
There is even talk that the first MacBook based on Apple ARM chips will appear in 2020, and of course the benefits of the latest Apple A11 or A12 Bionic made clear the potential of these models. Intel has not only not won the mobile battle, but now its relevance in PCs and laptops is in danger.
Defend and then attack
In that strategic acquisition there are two distinct parts. The first, that of the aforementioned 5G patent catalog. The second, the technology and talent that Apple has bought with those 1,000 million dollars.
That portfolio of patents – about 8,500 related to the field of mobility, which add up to another 8,500 that they already had – look in the short term and allows Apple to defend itself before possible legal threats when developing products that use this technology. As they point out in VentureBeat, this patent catalog is a powerful defensive weapon.
It is above all considering that patent legal battles They are very frequent in the United States and there are those who see potential attacks by companies such as Huawei – things are not precisely relaxed with this Chinese manufacturer – that owns 15% of existing 5G patents.
The second part of the agreement, the one focused on technology and the employees that develop these modems, looks more to the future in the medium and long term. It is the key to get the firm to achieve design modems that compete with Qualcomm's, something that is difficult for them to do soon but they certainly have resources to do in a period that experts claim to be less than five years.
In fact, the agreement that Apple has reached with Qualcomm, and for which it has paid 4,700 million dollars, allows to license and use its 5G modems for the next 6 or 8 years, margin more than enough in order to develop competitive chips.