Apple's Purchase Of Intel's Modem Business Is All About 5G

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Analyst Anshel Sag gives his take on the announcement that Apple will buy Intel's 5G smartphone assets.

to give a breakdown of exactly why this would happen, but now I’d like to go into even more depth on what will happen next and why.

Apple has wanted to build its own modems for a very long time. Apple’s entire chip business is predicated on integration and cost optimization. Apple owns the operating system and it owns the SoC, so why shouldn’t it also own the modem? Furthermore, its biggest silicon competitor is Qualcomm, who already integrates its modems into its Snapdragon SoCs. Apple loves to do things in-house and if it can, it will.

Intel’s biggest push on modems really began last year when it announced it would spin up a 1,000+ person 5G modem division in San Diego. That was increased to 1,200 people earlier this year, announced days before Apple’s now-settled lawsuit with Qualcomm began in San Diego. I suspect that Apple will continue to expand and hire. Apple acquired Intel’s modem business because it would have taken it a minimum of 5-10 years to build a modem business of its own from scratch.

Apple still has a modem supply and licensing agreement with Qualcomm, which means it is not going to kick Qualcomm to the curb right away. What will more likely happen is that Apple will work diligently to build a 5G modem that caters exactly to its future needs, which can be integrated into all of its custom SoC designs and give it complete control of connectivity. There is also a significant amount of RF design for 5G that needs to be accounted for, especially with mmWave.

It’s really unfortunate to see Intel get rid of this division; the company had the potential to be a real supplier to more than just Apple. At the end of the day though, things just weren’t moving fast enough for Intel to compete with Qualcomm and satisfy its only customer. My biggest concern for Intel is how this will impact its future PC business; Intel’s lack of cellular connectivity could be a weak point for Qualcomm to attack.

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