Why Apple buys the fashion division of Intel

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Dusseldorf, Munich As Tim Cook in 2009 Apple (initially temporary) took over the business, he described his principles in an interview with analysts. He talked about innovation, simplicity – and the supply chain. “We believe that we need to own and control the key technologies behind the products we make,” said the logistics specialist.

This policy can be tasted something Apple: The electronics company buys for a billion dollars, the business of smartphone modems of Intelincluding 2200 employees, equipment and patents. With this he secures an important technology for the 5G era. But it will take a few years until it is ready for use.

The deal is not a big surprise. In April, Apple ended a long-standing lawsuit Qualcomm and agreed a license deal with the chipmaker. The iPhone manufacturer can use the radio technology for several years, also for the new mobile radio standard 5G.

As a result, Intel saw its own chances of losing the sole customer Apple permanently in the business – and announced to close the division. Since the group from Cupertino invested heavily in the development of its own components, he was immediately considered a prospective customer.

“Apple is pleased to see so many excellent engineers joining our growing mobile technologies team,” said Johnny Srouji, managing director. They would help “drive our development for future products and enable Apple to continue to differentiate in the future.”

With the purchase Apple holds according to own data more than 17,000 patents on mobile technologies. These range from protocols for cellular standards to modem architecture. This should help the Group to avoid new patent disputes with Qualcomm and other companies.

Apple has been investing in proprietary chips for years, from processors for mobile devices to graphics processing to a specialty component that connects the Apple Watch to the Internet. Thanks to the integration to silicon, hardware and software can be “uniquely matched,” Srouji once said.

This is noticeable on the one hand in the performance, on the other hand in functions. For example, face recognition in the iPhone X and subsequent models uses Artificial Intelligence to identify the person in front of the camera. The processor can execute the algorithms directly on the device without connection to the Internet.

The 5G mobile communications standard is considered a key component for future smartphones – enabling significantly higher speeds and new applications. Therefore, Apple has for some time ambitions to detect mobile modems to develop. The iPhone manufacturer has opened an office in San Diego near Qualcomm headquarters and recruits employees.

However, the development is tedious and expensive. Different to Samsung and Huawei, who are also developing network technology in addition to smartphones, the group from Cupertino has so far had no experience with the new standard. In addition, a manufacturer must have his equipment certified for the networks.

Until Apple can incorporate their own 5G modems in iPhones and iPads, should therefore pass some time. Because even with the know-how of Intel, Apple could hardly develop any products in the next three to five years, which would have a chance to compete with Qualcomm, said the analyst Patrick Moorhead of Moor Insights & Strategy.

In addition, further acquisitions may be necessary to master the complex 5G technology, explains the analysis house CCS Insights. As possible candidates it looks at Qorvo and Skyworks. Both companies already supply Apple.

The end of an experiment

For Intel, the sale means the end of an experiment. Silicon Valley's chipmaker has built a lot of new business in recent years, also for fear of the demise of the PC. With processors for network computers, he had long been a resounding success, but on smartphones, he could never really get a foothold.

The hopes were great when Intel 2010, the mobile sector of the Munich competitor Infineon bought for well over a billion euros. Although the Group already had chips for mobile devices on offer, there was a gap in the processors that directly control the network connection of smartphones, for example, which closed the Infineon division.

Intel Vice President Anand Chandrasekher said on purchase that Infineon has not only the technology, but also good customers. One of them was Apple back then. After the takeover, they wanted to significantly expand the business through investment. The plan never went up.

Intel is now giving up a large office in Munich with the sale. The US company sits next door to Infineon on the campus of the Dax Group in the south of the city. Instead of the blue Intel logo, the white apple will soon be there.

More: AI is Booming the Chip Industry – New applications are creating tremendous opportunities for semiconductor manufacturers. However, PwC warns in a new study that Europe is not well enough prepared for this.

Product Tag (t) Computer Technology Smartphone (t) Innovation (t) Apple (t) Intel (t) Infineon (t) Qualcomm (t) Huawei (t) PwC German Revision (t) Samsung (t) Semiconductor ( t) components (t) computers & computer accessories (t) telephones

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