This story requires our BI Prime membership. To read the full article,Intel is essentially giving its technology away by selling its 5G smartphone business to Apple for $1 billion, analysts say.
But giving up the failing business is a smart move for Intel, which expects the move to generate savings of up to $500 million.Intel is essentially giving its technology away in selling its failing smartphone modem chip business to Apple for $1 billion, but the chip giant had no choice in order to get rid of a thorn in its side, analysts say.
Analyst Rob Enderle of the Enderle Group said Intel found itself in a a"horrid bargaining position," against Apple, at a time when the chip giant is also struggling to regain its footing in other key arenas, particularly the data center market. So when Apple came calling, Intel likely felt forced to enter into a deal — even if the price was lower than what executives and analysts alike were looking for. Still, the short-term frustration of taking a suboptimal deal may fade with the freedom that comes with removing this metaphorical albatross from around its neck.The sale ends months of speculation on the future of that business after Intel surprised the tech world in April with word that.
With the PC market shrinking, Intel has focused more on the more lucrative datacenter market. But it has recently wrestled with a slump in that market. Intel also has struggled with production issues and stiffer competition from rivals AMD and Nvidia. The sudden leadership change also didn't help.
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