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July 22, 2019 
martin wolf Transaction Analysis
Apple in Advanced Talks to Acquire Intel's Smartphone-Modem Chip Business

Financial Information
  • N/A
Transaction Facts
  • This afternoon, The Wall Street Journal reported that Apple is in advanced talks to acquire Intel's smartphone-modem chip business. 
  • A deal between the two would cover a portfolio of patents and staff valued at $1 billion or more, and could be reached within the next week according to the article. 
  • The acquisition would give Apple access to Intel's modem chips -- something that Apple has independently been working on to differentiate its business. 
  • The deal would allow Intel to shed a business that has been losing $1 billion annually. 
  • Apple closed up 2.29 percent and was up .44 percent after hours trading. Intel closed up 2.15 percent and was up 1.13 percent after hours trading. 
martin wolf  Analysis
  • Control of the Supply Chain: This reported acquisition is consistent with Apple CEO Tim Cook's logistics background. Acquiring Intel will allow Apple to better control the supply chain -- and impair other chipmakers. Intel competitor and Apple's current chip supplier Qualcomm is down approximately 2 percent and 3 billion of market cap after market close. This deal will push Qualcomm out as the sole supplier of Iphone modems -- which was part of a two-year legal fight between Apple and Qualcomm
    Image result for intel logo
  • Apple Thinks Ahead: Apple has recently focused heavily on building out its services revenue stream. But hardware, and specifically its iPhones, remain core to its bottom line. This deal would be a strategically and financially smart decision for its business operations. Acquiring an established chip development unit has the potential to significantly accelerate Apple's own chip program, with positive implications for both the looming move to 5G and other internal improvements. This is especially important as the company struggles with slowing iPhone sales. 
martin wolf  is not the advisor in this reported transaction.

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Headquartered in Scottsdale, Arizona with an office in New York, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 160 transactions in over 20 countries and sold eight divisions of Fortune 500 companies. 


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