Intel Corporation has agreed to sell a majority of its smart-phone modem business to Apple. The sale, for $1 billion, is said by analysts to have the potential of assisting in Intel’s ongoing quest to get the company back on track with its technology offerings.
Apple will acquire the smart phone modem operations as well as a portfolio of patents and about 2,200 staff members (ref. WSJ). The deal is expected to benefit both companies – with Intel paring down some of its smartphone operation that had failed to live up to expectations, losing about $1 billion annually and for Apple, allowing the iPhone maker to build a critical mobile phone component in-house. Apple expects to be able to design its own modems that its smartphones use to send and receive data and execute calls over mobile carriers’ wireless networks. In this way, the company will be able to integrate the modems with the phones’ other microprocessors, thereby boosting the iPhone’s battery life and saving valuable space inside the iPhone. The sale is only the second largest that Apple has made, after paying $3 billion for Beats Electronics in 2013. Intel, the largest U.S. chip maker in terms of revenue, reported an earnings decline in the second quarter, from $1.04 per share to 92 cents, and sales that were down 3%. That marked the company’s first quarterly drop in profit since 2017 and, even though less than analysts were expecting, underlines the company’s right-thinking approach in its decision making about paring back on some of its underperforming units in an effort to reorganize for current market conditions.
ALL THE MOVING PARTS – Every company operating in today’s modern marketplace must constantly and carefully scrutinize how all of its parts are operating together. For those areas that aren’t a substantial or potential contributor to the operating whole, changes must be made.