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Apple in advanced negotiations to buy smartphone-modem chip business Intel


AAPL 2.29%

is in Advanced Purchase Negotiations

Corp. The smartphone-modem business chip, according to people familiar with the issue, will push the iPhone manufacturer's push to take control of the development of critical components that power its devices .

The deal, covering a portfolio of patents and staff worth 1 billion dollars or more, can be reached next week, people said ̵

1; assuming that the talks did not collapse.

Although the purchase price is a rounding-off error for hundreds of billions of dollars, the deal will be strategically and financially important. This will give Apple access to engineering and talent over Intel's long-standing push to develop modem chips for the next-generation wireless technology known as 5G, potentially saving years of development. Apple is working on chip development to further differentiate its devices as a global smartphone platform, pushing the iPhone business, which has long supported its profits. He hired engineers, including some from Intel, and announced plans for an office of 1,200 employees in San Diego.

For part of Intel, the deal will allow the company to cast a business that weighed its end result: smartphone operation is losing about $ 1 billion a year, says a man familiar with his results and generally fails to meet expectations . Although it will come out of the smartphone business, Intel plans to continue to work on 5G technology for other connected devices.

Intel and Apple have been in talks and again for about a year. They failed at a time when Apple reached a multi-year modem supply agreement with Intel's rival


The Wall Street Journal reported in April.

Intel has thrown a wider network for buyers then, and has received expression of interest from a number of parties, but negotiations with Apple, long-regarded as the most logical buyer, soon resurface.

Apple's supply deal with Qualcomm, which has so far been the only supplier of iPhone modems, is part of resolving the two-year legal battle between companies that Qualcomm is gathering for its wireless technology. Intel made a break with Apple as this feud became worse, but announced after settling that it was giving up the development of modems for 5G smartphones – an effort that spent a decade and billions of dollars, not showing a clear path to profitability. Intel bought its business in 2011 by

Infineon Technologies

Apple-Intel debates began last summer around the time Intel's former CEO Brian Krsanic resigned, people familiar with the matter said. Mr. Krzanich protects modem business and highlights 5G technology as a major future revenue stream. When Bob Swann was appointed to work in January, analysts said the chances of a deal increase because his focus on Intel's cleaning will require coping with losses in the modem business.

Intel is Apple's newest outlet for business since the iPhone manufacturer moved to develop internal components. At the end of last year Apple agreed to a $ 600 million deal to acquire 300 engineers and equipment

Dialog semiconductor

PLC, as the company is increasingly developing the Dialog battery management chips.

Apple is not reluctant to shorten major deals in the past, preferring to acquire about 15 to 20 small companies a year with technology that can easily integrate. But with the delay in business with the iPhone, the company became more open to bigger deals. He spends his giant cash reserves on redemption of shares and dividends, but still has a significant military back, with $ 113 billion in post-debt money by March 30.

Apple will announce its results for the fiscal third quarter next week. Intel's results will come later this week.

Dow Jones & Co., publisher of the magazine, has a trade agreement to deliver news through Apple's services. Write to Dana Similika at dana.cimilluca@wsj.com, Kara Lombardo at cara.lombardo@wsj.com, and Tripp Mickel at Tripp.Mickle@wsj.com

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