The news that Apple is lining up Intel’s smartphone modem chip business for a $1 billion buyout has sent shockwaves through the tech industry, with some calling it a pivotal moment for the smartphone industry-at-large.
The Wall Street Journal reported on Tuesday that the Cupertino giant was in “advanced talks” to buy Intel’s modem wing within the next week, citing unnamed sources “familiar with the matter”. If true, it cements Apple’s desire to embed 5G connectivity within its iPhone product line, as competitors edge ahead in the field.
Qualcomm’s Snapdragon 855 already comes equipped with 5G capability, and Huawei announced at this year’s Mobile World Congress that its Mate X handset not only includes 5G, but folds.
Apple’s iPhones use Qualcomm’s technology. The Intel move suggests it will try to bring its phones in line with those leaders—but also to bring as much of its production in-house, aiming to use its massive financial clout to blow competitors out of the field.
The news will be a boost to Intel investors: the company was set to leave the 5G altogether, and in April CEO Bob Swan announced that it presented “no clear path to positivity and positive returns.”
Unlike Apple, Intel does not command 15.8% of the global smartphone market. But Apple has problems it will hope this purchase can alleviate—not least that its own sales dipped from 73.2m to 64.5m this past year. The company is also concerned that its legacy models have almost the same functionality as newer models, leading many consumers to buy older, cheaper iPhones. Fitting new ranges with 5G would likely change that.
Not everybody is convinced about the Intel deal’s value, however—nor its veracity. “Anything that Apple can do to take control of the supply chain, they’re going to try to do,” said CNBC host Jim Cramer. “But Qualcomm still has important business.
“I don’t think it’s real,” Cramer added. “I think that they just made some sort of patent deal.”