Apple’s Intel Modem Acquisition Its Latest Move in 5G Chess Match

Apple’s Intel Modem Acquisition Its Latest Move in 5G Chess Match

Apple is buying Intel’s smartphone modem business for $1 billion. This move has been anticipated for the past couple of months and is significant for four reasons:

    This is another example of Apple wanting to own the technology behind the products that it makes. The vertical integration strategy yields greater control over product innovation and manufacturing.
    If successful, Apple would likely no longer use the industry-standard Qualcomm modem, and potentially gain a feature advantage (i.e. lower power usage) over the industry.
    Building this modem will be difficult. We expect the first Apple modem in mid-2022, two years after the expected debut of Apple’s first 5G phone in the fall of 2020.
    Starting in 2023 this could save Apple about $2B per year in licensing fees paid to Qualcomm (assuming royalty of approximately $8 per device), and increase Apple’s gross margin by just under 1% (38.1% to 38.8%).

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