The deal will be worth about US$1 billion, pocket change for either Apple or Intel, but a crucial one for Apple as it seeks to prop up its iPhone business that has been its main money maker but which has lost some steam over the last couple of years, The Wall Street Journal reported.
Earlier this year, Intel said it was shutting down its 5G modem business after Apple and Qualcomm reached an out-of-court settlement to end all pending litigation between them, and also signed a multi-year deal for supply.
The two companies struck a six-year licence agreement, effective from 1 April, which includes a two-year option for extension and a multi-year chip supply deal.
But soon after the Apple-Qualcomm announcement, Intel said it would be exiting the 5G smartphone modem business and not even launching the products it had planned for 2020.
The WSJ said any deal would give Apple access to development work as it looked to differentiate the iPhone further from other smartphones in what has become a crowded field. The iPhone maker has hired engineers, some from Intel, and announced some 1200 workers would take up this work in an office in San Diego.
The benefit to Intel would be getting rid of an unit that has been losing close to US$1 billion every year. However, Intel would continue to work on 5G technology for other connected devices.
At the time when it announced it would halt work on 5G smartphone modems, Intel's chief executive Bob Swan said it had become apparent that there was no clear path to profitability for this line.
“5G continues to be a strategic priority across Intel, and our team has developed a valuable portfolio of wireless products and intellectual property," Swan, who took over from Brian Krzanich earlier this year, said.
"We are assessing our options to realise the value we have created, including the opportunities in a wide variety of data-centric platforms and devices in a 5G world.”