The race for 5G is on. In the latest developments, the Wall Street Journal revealed that Apple (NASDAQ:AAPL) is looking to acquire a smartphone-modem business from Intel. While the deal is not yet final, the WSJ report indicates that Intel will give up all assets including staff and a portfolio of patents.

Taking control of the supply chain

It has become tradition for Apple to want to take full control of the supply chain for the iPhone, its flagship product. Interestingly, the tech giant already has Qualcomm as its supplier for chipsets.

Earlier this year, Apple and Qualcomm put out a statement indicating that they had settled a dispute concerning royalties. As per the statement, Qualcomm has a multi-year contract to supply chipsets to Apple. This is to say that once 5G matures and it becomes imperative for all devices to spot 5G modems, Qualcomm should be the designated supplier.

However, that seems difficult to happen as Apple looks to move closer to self-sufficiency concerning key supplies. The decision to consider taking Intel’s 5G modem business under its arm is sufficient evidence that Apple is ready to gamble on the success of 5G.

Can 5G boost iPhone sales?

It is interesting that Apple is developing interest in a business which Intel thinks is not profitable. In mid-April 2019, Intel’s Bob Swan said that his company intended to bow out of the 5G smartphone market. Particularly, Swan cited the lack of a “clear path to profitability and positive returns” as the reason for the exit.

For Apple, this is all about the long game. In particular, smartphone sales have continued to dwindle in the recent months. While addressing investors in January, Apple CEO, Tim Cook, noted that sales for Q4 2018 were below the expected number due to the possibility of a smartphone saturation. Basically, this means that smartphone makers need to find novel ways of generating higher sales.

Therefore, the intention to acquire the smartphone-modem business from Intel could be in preparation for the integration of 5G modems into future iPhones. Basically, Apple wants to avoid buying chips from other firms if and when it becomes necessary to incorporate 5G chips in smartphones.