Comms chips

Apple Could Pay $1B for Intel's Smartphone Assets – WSJ

iPhone maker Apple is in "advanced talks" to buy Intel's smartphone chip business for a fee of about $1 billion, according to a report from the Wall Street Journal that cites people familiar with the matter.

The latest update comes weeks after a similar report from The Information, which cited four unnamed people briefed on discussions between Apple and Intel.

According to the WSJ, any deal would cover patents and employees and could be announced during the coming week as Apple tries to gain control over the technology that powers its devices.

It could ultimately point the way toward independence from Qualcomm, a key components supplier that has been at loggerheads with Apple in recent years over royalties.

Apple had turned to Intel's modem chips while it was fighting Qualcomm in court, but Intel made the dramatic announcement that it would stop developing modems for 5G smartphones immediately after Apple and Qualcomm reached a settlement in April this year.

Intel is now keen to offload a division that has been losing about $1 billion annually, according to the WSJ report, but will continue to work on 5G technology for other connected devices.

It bought the modem business in 2011 from Infineon in a deal valued at $1.4 billion.

Apple has already taken steps to bring components development in-house, acquiring battery-management assets and expertise from Dialog Semiconductor in a $600 million deal announced in late 2018.

The Cupertino-based company had cash reserves of about $113 billion at the end of March, after accounting for debts.

To date, its biggest deal has been its $3 billion takeover of headphone maker Beats Electronics in 2014.

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Due to report third-quarter results next week, Apple reported a 5% revenue decline in its March-ending second quarter, to about $58 billion, compared with the year-earlier period. Net income dropped 16%, to $11.6 billion.

Apple made $9 billion less in revenues from iPhone sales than a year earlier, with executives blaming a slowdown in China for the shortfall.

Analysts say the smartphone replacement cycle is lengthening as customers stick with their existing gadgets for longer than ever.

They have also noted a rise in smartphone competition from Chinese vendors such as Huawei, which has pushed aggressively into the top end of the market.

Trade restrictions the US recently imposed on Huawei have recently threatened to upset that trend, preventing the Chinese equipment giant from obtaining the components and software its devices need.

Like Apple, but for different reasons, Huawei is also now trying to bring more components development in-house.

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— Iain Morris, International Editor, Light Reading

James_B_Crawshaw 7/23/2019 | 6:17:20 AM
Victor Kiam in reverse We dislike your chips so much we are going to buy the whole business.
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