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Report: Apple Developing Its Own Cellular Modem

By Eric Volkman - Dec 11, 2020 at 5:59PM

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It's a natural next step for the tech giant, which recently unveiled new devices powered by processor chips that it developed in-house.

As part of a broader plan to make more of its products' key components in-house, Apple ( AAPL 2.19% ) is developing its own cellular modem chip, Bloomberg reported in an article published on Thursday after market hours.

The news agency gleaned this from remarks made by Johny Srouji, Apple's senior vice president of hardware technologies, during a town hall meeting with employees.

Srouji was quoted as saying that "This year, we kicked off the development of our first internal cellular modem which will enable another key strategic transition."

"Long-term strategic investments like these are a critical part of enabling our products and making sure we have a rich pipeline of innovative technologies for our future," he added.

Apple iPhone 12 Pro and Pro Max.

Image source: Apple.

It was not clear when the modem project started, nor whether there's a target deadline for it to be completed. The news, though, was not a complete surprise for two key reasons. First, Apple acquired Intel's ( INTC 2.50% ) cellular modem business last year in a deal valued at roughly $1 billion, and second, it recently announced a new proprietary computer processor called the M1. The latter will replace the Intel chips the company has been using in its products under a long-term arrangement between the two companies.

As for cellular modems, Apple currently utilizes products from Qualcomm ( QCOM 4.55% ). Such components are crucial to the functioning of smartphones, as they facilitate both calls and connections to the internet through cellular signals. Neither Apple nor Qualcomm has made any official public statement regarding the former's in-house modem development efforts.

Qualcomm closed trading Friday down by about 7.4%, while Apple was off by about 0.7%. The benchmark S&P 500 index slipped by 0.1%.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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