$1 billion acquisition of Intel mobile phone baseband business(electronic equipment China news)

28 Jul 2019

Finally official announcement! Apple announced on Thursday that it will buy the Intel modem business! Apple will spend $1 billion to acquire Intel's majority stake in the smartphone modem (mobile phone baseband) business. This time, Apple's 5G baseband orders will be spent, and there is no need to touch the "core" of Qualcomm and Intel. This "core" will have the "brand" of Apple and Intel in the electronic equipment China future, but this future is not known for a long time.

Apple explained in an official statement: Intel's majority of smartphone modem business. About 2,200 Intel employees joined Apple. At the same time, Apple will also receive intellectual property, equipment and related leases.

After the completion of the acquisition, Apple's related strength will be greatly enhanced, with more than 17,000 wireless technology patents, ranging from cellular standard protocols to modem architecture and modem operation.

Intel, on the other hand, will retain the ability to develop modems for non-smartphone products, such as personal computers, IoT devices and self-driving cars.

The entire transaction is expected to be completed by the end of the fourth quarter of 2019, subject to approval by the competent electronic equipment China authority and other customary conditions, including the work committee and other relevant advice in certain jurisdictions.

Individual acquisition after the transaction

Both Silicon Valley giants hope to solve their technical electronic equipment China flaws through this transaction.

For Apple, the acquisition adds support to the iPhone maker's research on key mobile phone components. Kevin Krewell, an analyst at chip analytics firm Tirias Research LLC, said that by designing its own modem, Apple should be able to integrate them more effectively with other iPhone microprocessors to improve the iPhone. Battery life and save valuable space inside the iPhone. New features can be developed to make Apple's devices more different from other brands. In the past, Apple also adopted the same strategy in the manufacture of mobile phones and tablet processors, and the results show that this does allow the company's chip development to lead the industry.

In addition, Apple can also reduce its reliance on Qualcomm. In the past, Apple has accused Qualcomm of charging excessive patent fees. Although it has been settled in April and signed a patent contract for six years, it is still an urgent electronic equipment China task for Apple to develop a self-made modem.

Intel still enjoys modem services other than mobile phones, such as personal computers, IoT devices, self-driving cars, and so on. CEO Bob Swan said the electronic equipment China acquisition will allow Intel to focus more on developing other 5G technologies.

On April 25, Bob Swan responded to Intel's withdrawal from the 5G mobile phone modem business. Bob Swan said: "Apple has reached a settlement with Qualcomm. We internally believe that the profitability of the 5G mobile modem business is generally considered. Will be less optimistic, so decided to quit.

Although the 5G mobile phone modem business has withdrawn from competition, Intel said that it has not given up 5G, and has completed the application evaluation of 5G baseband chips in the fields of PC and Internet of Things, and Intel has accumulated in the field of 5G infrastructure construction. In addition, Intel said it still plans to offer Apple a 4G modem.

According to the Wall Street Journal, Apple and Intel have started negotiating related issues last summer. It is also the settlement between Apple and Qualcomm, making it more urgent for Intel to find buyers. Apple is the largest customer of Intel modem chips.

At the same time, Intel reported that its second-quarter net profit fell 17% year-on-year due to weak demand in the Chinese market. This is the electronic equipment China company's first quarterly profit decline since the end of 2017, but the latest data is still beyond analysts' expectations.

After the announcement of the acquisition, Intel’s share price has risen by more than 6%, and Apple’s share price has barely changed.

For Intel, the deal with Apple has freed it from the smartphone electronic equipment China business. The business had previously lost about $1 billion a year and has generally failed to meet the company's expectations.

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