The iPhone maker is in advanced talks with Intel to buy its modem chip business in a deal valued at at least $1 billion, reports the Wall Street Journal. The publication notes that, unless talks fall apart, Apple and Intel could close the deal within a week.
The deal makes sense for both companies for a lot of reasons. Intel’s modem chip unit has been a money pit for the company for years. It’s reported to be losing up to a billion dollars annually. As for Apple, the company spent the last year in legal battles with its go-to modem chipmaker Qualcomm. Though those battles were resolved, it hardened the position of some leaders in Apple that the company needs to accelerate its plans to start designing custom modem chips in-house to lessen its reliance on outside chipmakers.
Apple has long designed its own chips for the iPhone line with the A-series chip, the S-series chip for its Apple Watch, the T-series security chips for its Macs, and the W-series and H-series chips for its AirPods. If Apple were to acquire Intel’s modem chip business, it would give it a leg up on the development of its own custom silicon for advanced 5G modems, which are expected to come to the iPhone in 2020. As part of the deal, Apple would get a portfolio of Intel’s modem patents and its staff.
And though $1 billion seems like a big price tag, it’s just a drop in the bucket for Apple. At the end of last quarter, the company had $113 billion in cash sitting around.