Apple Inc. AAPL 0.78% is in advanced talks to buy Intel Corp. INTC 0.78% ’s smartphone-modem chip business, according to people familiar with the matter, a move that would jump-start the iPhone maker’s push to take control of developing the critical components powering its devices.
A deal, covering a portfolio of patents and staff valued at $1 billion or more, could be reached in the next week, the people said—assuming the talks don’t fall apart.
Though the potential acquisition price would be a rounding error for companies valued in the hundreds of billions of dollars, a transaction would be important strategically and financially.
It would give Apple access to engineering work and talent behind Intel’s yearslong push to develop modem chips for the crucial next generation of wireless technology known as 5G, potentially saving years of development work. Apple has been working to create chips to differentiate its devices as smartphone sales plateau further globally, squeezing the iPhone business that has long underpinned its profit. It has hired engineers, including some from Intel, and announced plans for an office of 1,200 employees in San Diego.
For Intel’s part, a deal would allow the company to shed a business that had been weighing on its bottom line:
The smartphone operation had been losing about $1 billion annually, a person familiar with its performance has said, and has generally failed to live up to expectations. Though it would exit the smartphone business, Intel plans to continue to work on 5G technology for other connected devices.
Intel and Apple have been in off- and on-again talks for about a year. They broke down around the time Apple reached a multiyear supply agreement for modems with Intel rival Qualcomm Inc., The Wall Street Journal reported in April.
Intel had cast a wider net for buyers then and received expressions of interest from several parties, but the talks with Apple—long seen as the most-logical buyer—soon resumed. Read more