Apple Inc. said today it will acquire the majority of Intel Corp.’s smartphone modem business in an all-cash deal valued at $1 billion.

About 2,200 Intel employees will move to Apple, and the iPhone maker will also obtain intellectual property and equipment relating to the business once the transaction closes before the end of the year.

The deal isn’t as a surprise since the companies have reportedly been negotiating the sale for some weeks already. The acquisition appears designed to help Apple build its own 5G modems for its iPhones, which would mean that it will eventually no longer have to rely on third-party suppliers such as Qualcomm Technologies Inc. for the hardware.

Intel isn’t exiting the modem business entirely. It will keep the parts of the business relating to modems for personal computers, autonomous cars and “internet of things” devices. Intel Chief Executive Bob Swan said in a statement the sale means that the company can now focus on “other 5G technologies.”

For Apple, lessening its reliance on Qualcomm for its components is thought to be a long-term strategic goal. The company only recently announced it had resolved a long-running legal dispute with that chipmaker over its alleged overcharging of patent royalties.

Apparently, that dispute was resolved out of necessity as Apple found it was unable to build a 5G iPhone without Qualcomm’s components. That put it in an awkward position because most of the major Android smartphone makers have already announced 5G handsets.

Apple had dropped Qualcomm as its main modem supplier in favor of Intel as a result of the dispute. However, the company later realized that Intel was some way behind Qualcomm in the 5G modem stakes, and a suitable chip was likely two or three years away from being finished. That prompted Apple to settle its differences with Qualcomm and sign a new, six-year patent licensing deal with that company. Apple’s first 5G iPhone is now expected next year.

Johny Srouji, senior vice president of hardware technologies at Apple, said the acquisition of Intel’s modem business would help the company to “expedite our development on future products and allow Apple to further differentiate moving forward.”

There are several potential benefits for Apple if it can build its own smartphone modems, analysts say. They include better integrating the hardware with its devices and developing new features that can differentiate its products. Apple has already pursued a similar strategy with its own central processing units for its smartphones and tablets.

But this initiative could take longer than some people expect to come to fruition. “Apple believes it can lower costs and have more control by creating its own modem,” Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, said earlier this week when it was revealed that talks between the companies were at an advanced stage. “However, I still think it takes in the best case five years to get competitive.”

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