Apple Inc. (AAPL.O) is negotiating to buy Intel Corp.’s struggling cellular modem unit, said a person familiar with the matter.
A deal would give Apple key engineering talent and patents that would help it develop new devices to connect to the mobile internet. The Intel assets could be valued at about US$1 billion in a transaction, said the person, who asked not to be identified because the matter was private.
An agreement could be reached as soon as this week, though it’s possible talks could break down without a deal, the person said.
Representatives for Apple and Intel declined to comment. The negotiations were reported earlier by the Wall Street Journal.
Apple is building its own cellular modems for devices like the iPhone, iPad and Apple Watch in part to eventually reduce its reliance on buying parts from Qualcomm Inc. or others.
Apple’s latest iPhone models currently use modems sourced exclusively from Intel, but the company settled its long-standing royalties lawsuit with Qualcomm in April amid plans to sell 5G iPhones in 2020. Qualcomm’s 5G modems are widely regarded to be superior to those from Intel. However, Apple’s licensing and royalties agreement with Qualcomm ends in six years and Apple appears intent on eventually replacing the Qualcomm parts with modems developed internally.
A deal with Intel could be similar to Apple’s agreement to pay Dialog Semiconductor Plc US$600 million to take over its power management business, the provider of another key component for Apple’s devices. Intel currently provides modems for Apple’s 4G LTE iPhones.