Apple Divorces Intel
by Jim Lundy, Ken Dulaney, and Adam Pease
Apple's computers have been powered by Intel for 15 years, but on Monday at its Worldwide Developer Conference event, Apple revealed that it would be breaking off its chip development partnership. Apple's next generation of laptop and desktop computers will be powered by ARM chips, the same kind of processor used in the iPhone. In this blog, we explore the reasons for this change and consider some of the market implications it may have.
The Computer Processor Takes Inspiration from the Smartphone
Apple has had a great run working with Intel, who it used to develop a whole generation of processors for laptops. Since the beginning of their partnership though, Apple has matured and cut its teeth on ARM design throughout its highly successful venture into the mobile market. With the iPhone as its flagship product, it makes sense that Apple would rationalize its new offerings on the basis of iOS processors.
Further, Apple has faced challenges working with Intel. Recently, supply chain tie-ups led to delays in the production of Apple chips, which held back the production of laptop computers and iMacs. Switching to ARM processors is, in part, a way for Apple to boost its computer sales.
At the same time though, the change brings about new compatibility between iOS and macOS, enabling iOS applications to run on Apple ARM-powered Macs. Google set the stage for these changes, creating a wide product ecosystem in which apps were synchronized between Android, Chrome, and Google Chromebook laptops. For these big players, the chip wars are on, and Apple's new decision has given it control over its own destiny.
Intel Takes a Hit in the Chip Wars
Intel has long been a giant in the chip wars, but now it may be falling behind. After experiencing a 3-year delay on its 10-nanometer processor, it has now been outpaced by competitors such as TSMC and AMD. TSMC, the Taiwanese chip foundry that Apple has chosen for its new chips, uses a 5-nanometer processor.
The speed of these new processors positions Apple's next generation of computers well. Organizing its product portfolio around the central architecture of the iPhone and iPad is an effective way to drive the adoption of iOS apps and strengthen the ties between different product lines. It remains to be seen what this move will mean for the Apple stock price, but we feel Apple is positioned well in the market. The era of dominance for Intel computers may be coming to a close. Microsoft and other PC manufacturers may also be forced to follow this move.
Apple's decision to switch from Intel chips to ARM chips reveals how the iPhone and smartphone architecture has come to inspire the developments of computers. It will bring compatibility to iOS and macOS, enable Apple to scale up its production, and help it sell faster computers. For Intel, the move suggests this giant of the chip industry may have lost its lead. Time will tell who comes out on top, but one thing is certain: Apple has shown it is willing to shake things up.