Shares of Intel Corporation (NASDAQ: INTC) were trading higher Tuesday morning after The Wall Street Journal reported the company's smartphone-modem chip business could be sold to Apple Inc. (NASDAQ: AAPL)
What To Know
Sources close to the matter told WSJ Intel could sell its smartphone-model chip patents and corresponding staff to the iPhone maker for $1 billion. Apple would gain new exposure to Intel's new technology which will be needed to power 5G smartphones. As such, Apple would be able to avoid years of R&D investments to develop a similar technology for its devices.
Intel would be divesting a business unit which generates losses of around $1 billion a year, a source told WSJ. The company would still have exposure to 5G technology for other devices.
Why It's Important
The potential price tag on a deal of $1 billion is pocket change for Apple given its $113 billion in net cash. Nevertheless, the deal is strategically important for Apple as it could further differentiate itself in the upcoming 5G cycle.
If talks don't fall apart, WSJ said a transaction could be finalized as soon as next week.
Intel traded higher by 1.2% at $51.96 in Tuesday's pre-market session.
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