Apple to Acquire Majority of Intel’s Smartphone Modem Business

Intel and Apple have signed an agreement for Apple to acquire the majority of Intel’s smartphone modem business. Approximately 2,200 Intel employees will join Apple, along with intellectual property, equipment and leases. The transaction, valued at $1 billion, is expected to close in the fourth quarter of 2019, subject to regulatory approvals and other customary conditions, including works council and other relevant consultations in certain jurisdictions.

Intel will retain the option to develop modems for non-smartphone applications, such as PCs, internet of things devices and autonomous vehicles. “This agreement enables us to focus on developing technology for the 5G network while retaining critical intellectual property and modem technology that our team has created,” said Intel CEO Bob Swan. “We will put our full effort into 5G where it most closely aligns with the needs of our global customer base.”

In April, 2019 Intel announced intention to exit the 5G smartphone modem business. “We are very excited about the opportunity in 5G and the ‘cloudification’ of the network, but in the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns,” said Intel CEO Bob Swan.

Following the Apple-Intel announcement, CEVA’s shares in NASDAQ rose by 14%, to $28.99. CEVA from Israel provides the IP for the DSPs in Intel’s cellular modems. This is an important market for CEVA. It was well clear when its stock price had fell 13.6% in April, after Intel’s CEO revealed the exit plan from the smartphone modems business.