It is reported that Apple and Intel will announce the deal as soon as next week. Driven by this news, Intel shares rose 1.27% in after-hours trading on Monday. The stock price reached $52.00. Qualcomm, the leading smartphone chip maker for smartphones, fell more than 2%.
Intel currently offers LTE (Long Term Evolution) modem chips for Apple’s latest generation of iPhones. However, after Apple reached a settlement with Qualcomm on patent licensing practices in April this year, the two companies have announced that Apple will re-purchase Qualcomm’s modem chips. A few hours after Apple and Qualcomm reached a settlement, Intel announced that it would no longer develop the next generation of 5G modem chips.
A number of market analysts said that 5G technology is critical to Apple. When Apple implants 5G technology into the iPhone as soon as 2020, it will promote the massive upgrade of the iPhone.
Qualcomm is still developing its own 5G chip. Apple’s job postings show that the company may recruit employees to develop its own 5G modem chip. However, it is unclear whether Apple’s technology has matured and can be deployed on the iPhone.
If Apple buys Intel’s modem chip business, it will once again highlight Apple’s growing willingness to consider large-scale acquisitions worth billions of dollars. The Apple account has $225 billion worth of cash and marketable securities.
As of now, Apple’s largest M&A transaction is still in 2014. Apple spent $2.6 billion to acquire Beats Electronics and Beats Music. Last year, Apple spent $600 million to acquire British chip maker Dialog Semiconductor. As of now, both Apple and Intel have not commented on this report.