Apple Takes One Small Step Toward Bidding Intel Farewell

Apple (NASDAQ: AAPL  ) may ditch Intel  (NASDAQ: INTC  ) . Sure, it may be a few years out, but it's something the company is exploring, according to Bloomberg. Apple has already opted to design its own chips in its important smartphone and tablet product lines, and Macs could be next.

Apple iPhone keynote, presenting Apple A7 chip. Source: AnandTech.

The quest for thinner form factors and power conservation
Apple's mobile semiconductor business has several layers. The new A7 chip found in the iPhone 5s, for instance, is designed by Apple, licenses 64-bit architecture from ARM Holdings, and is manufactured by Samsung. Of course, there's one major name missing from this equation: Intel.

As the semiconductor business becomes increasingly mobile, many original equipment manufacturers, or OEMs (like Apple), have chosen alternatives to Intel. Though Intel still sets the standard in PCs and laptops, there are better solutions when power conservation is a major priority.

ARM Holdings, on the other hand, is known specifically for its power-conserving architecture, leading Apple to license ARM Holdings chip technology over Intel in mobile devices. Lacking power needed for desktop-class performance, however, Apple has only opted to bypass Intel in mobile devices, not PCs.

But if Intel can't find a way to conserve more power in its chips in the near future, Intel's sluggishness may lead Apple to ditch it in its desktop business, too. Intel has responded to Apple's concern for low-power processors by telling Apple that it is prioritizing the development of the technology. Still, this didn't stop Apple execs from expressing their concern. According to Bloomberg, a shared chip design across both mobile and desktop makes sense:

As handheld devices increasingly function like PCs, the engineers working on this project within Apple envision machines that use a common chip design. If Apple Chief Executive Officer Tim Cook wants to offer the consumer of 2017 and beyond a seamless experience on laptops, phones, tablets and televisions, it will be easier to build if all the devices have a consistent underlying chip architecture, according to one of the people.

With a slow-growing PC industry already hurting Intel, losing Apple as a client wouldn't be good for the company. Macs accounted for 11.6% of U.S. PC shipments in the second quarter of 2013, according to Gartner -- a significant enough slice of the pie for Intel to be concerned.

Apple's A7 processor is the first major move by Apple in this direction. The company says that the 64-bit processor has desktop-class processor architecture. Some critics pointed out that the A7's architecture is a bit unnecessary right now, since one of the key advantages of 64-bit is the ability to handle more than 4 GB of memory. Since no iDevice has this much memory, those gains are lost. However, this sets the stage for developers to begin optimizing apps for 64-bit architecture so when iDevices do reach that threshold, Apple will be prepared. Forward-thinking, indeed.

Though the A7 is not powerful enough to support PC performance, it's certainly setting the foundation for a potential common chip design at some point in the future.

The risks
A major switch like this is accompanied by a few risks.

First, will Apple be able to design ARM-based chips that are powerful enough for a PC? Intel's chips are suitable for power users, supporting the speed and graphics required for desktop-class performance.

Second, would Apple be able to keep up with Intel if it decided to ditch the company for a chip that is designed for both mobile and desktop use? This is basically the problem Apple had to deal with in 2005 when Apple was forced to migrate to Intel's superior chips.

The Apple way
Ditching Intel could make sense for Apple.

Dropping Intel echoes Apple's history of vertical integration. And as the world's most valuable company, Apple has more than enough cash to make the required capital investments. Even more, it wouldn't be the first time that Apple has navigated chip architectures. In fact, the Apple executive leading the switch in 2005 to Intel was none other than now-CEO Tim Cook, whom Steve Jobs had put in charge of the project. Negotiating terms and organizing the supply chain, Cook helped Apple switch over to Intel fairly seamlessly.

For a company whose brand is built around a superior user experience, a seamless experience across mobile and desktop devices, enabled by a common chip, makes sense. Is the 64-bit ARM-based architecture of Apple's A7 chip the first step for Apple in a direction that will inevitably lead the company to bid Intel farewell?

Is there upside left to Apple's stock?
Apple has a history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.


Read/Post Comments (15) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 07, 2013, at 5:25 PM, twolf2919 wrote:

    The author doesn't really give any good reasons for why Apple should care to make such a move other than to say "Dropping Intel echoes Apple's history of vertical integration" or "Apple has enough cash". Well, those are not really good reasons. Neither is "better user experience" - since there's no convincing argument to integrating laptops and tablets/phones at the UI level (how many people need/want a touch screen on a laptop or desktop? MS is trying - to no great success so far).

    The A7 chip may be "desktop class" - but does that justify asking laptop/desktop users to throw away their Intel-based software? Is the A7 powerful enough to take on the tasks currently assigned to one or more Intel chips in video and music production?

    So what's in it for Apple? What's the benefit? A naive response might be "well, there could be cost savings due only requiring a single supplier of CPU". I say "naive" because Apple needs so few CPUs for its desktops/laptops - relative to iPhone/iPad CPUs - these additional CPUs are essentially "noise" and won't reduce the overall purchasing costs of A7s. One might argue that A7s are much cheaper to build than Intel's Haswell chips, but that may not be the case once the A7 has to be made powerful enough to compete with those chips (additional on-chip caches, registers, etc. cost money)!

  • Report this Comment On October 07, 2013, at 6:30 PM, fwe43 wrote:

    @twolf2919

    -You reference touchscreen laptops and well, I'm absolutely positive that in the future all platforms will have a near seamless UI across every device. It is the wave of the future and makes perfect sense. True Win 8 has gotten bad press but it is in fact steps ahead of the competition and only getting better. In fact beyond touch screens, Win 8.1 promises the ability to navigate through gesture or eye movements. What's next holographic? Minority report style? Probably soon. Shockingly enough, it looks like MSFT might be the first there.

    Apple's flaw is in fact multiple OS's across devices, it's just not apparent to most people yet.

  • Report this Comment On October 07, 2013, at 7:00 PM, fearandgreed2005 wrote:

    This article should have been written two years ago. Intel's new 22nm processors have best in class power consumption for any given level performance. They have 14nm coming in 2014 that will put them even further ahead. If Apple wants to go with one architecture then they will go with Intel. Intel already makes the best chips for tablets and PCs. You will see them this Christmas. By the end of 2014 Intel will have the best chips for phones.

  • Report this Comment On October 07, 2013, at 8:29 PM, Netteligent09 wrote:

    Intel has its chance at Apple but fail to capitalize on opportunity of a lifetime. The current business on desktop, laptops, servers are reasonable at Apple. Apple has to be in a growth mode.

    It does not affect Intel much if Apple chooses to go with ARM.

    The worst nightmare comes true for Intel if Apple increase its market share and start eating the boring Wintel platforms. If Apple is in focus with a right team, they can effective penetrates servers and storage at a same time.

    ARM Holdings is ready to do whatever it takes to win the heart and mind of Apple without affecting its bottom line. It took more than 10 years for ARM to work on strategy, planning, and execution. There are more advanced technologies and optimized ARM chipsets for computers and servers markets today. They breath and live with customers. The time has come: Apple for the masses in 2014 and beyond.

  • Report this Comment On October 07, 2013, at 9:03 PM, twolf2919 wrote:

    @fearandgreed2005,

    Just like Apple has no real pressing reason to use the A7 for its laptops and desktops (see my comment above), it doesn't really have a reason to move its phones and tablets to Intel. Why cause hundreds of thousands of apps to have to be rewritten for x86 when the A7 is plenty powerful enough for the mobile environment. Not to mention, the A7 is a much cheaper part than anything Intel will sell Apple.

  • Report this Comment On October 07, 2013, at 9:27 PM, FoolSolo wrote:

    This article seems devoid of facts and research, and appears to be based on unverified rumors nearly a year old. How about posting a link to the Bloomberg source you're referring to?

    If Apple was really trying to settle on one chip architecture it would actually be more favorable for Intel than ARM. Intel is better positioned to continue furthering their process and manufacturing lead, and has already reached near parity in power consumption with ARM.

    From Apple's perspective it's to their advantage to keep both companies competing for their business. However, what Apple cannot do is allow Android based competitors like Samsung to gain a performance advantage.

    With Android already ported to X86, the Android camp seems to have a leg up on Apple since they can freely switch between either architecture. Google, Samsung, et al would love nothing better than for Apple to anchor to the wrong architecture. I doubt Apple would make such a mistake, so I'm quite certain Apple is working on, or has already ported iOS to X86 as a hedge against such an outcome.

  • Report this Comment On October 07, 2013, at 9:34 PM, RMengineer wrote:

    twolf2919 -

    "but does that justify asking laptop/desktop users to throw away their Intel-based software?"

    That wouldn't be unprecedented. Apple has already done this multiple times. 68000 -> PowerPC and PowerPC -> Intel.

    "So what's in it for Apple? What's the benefit?"

    The benefit is not just Apple but users as well. A common CPU platform across products means both a unified development environment to support as well as more seamless operation across platforms for consumers (of Apple products)

    I think fwe43 probably nails the bigger picture. In that much I agree. It is true that Windows 81 has been largely panned, for whatever reasons people may have. But that's not the issue as I see it. What Windows did attempt and did accomplish to some significant extent, despite derision, is to produce a more or less unified UI across platform.

    To the extent that they succeeded or failed isn't so much the point so much as the concept that this will be the trend going forward. That is mobile and desktop will shift from the current didactically different models to a convergence toward unification.

    This is for a number of reasons: obviously, people would likely prefer more similar UIs across their devices, as mobile CPU power and capability trends upward into desktop territory, mobile platforms will take only more and more desktop functions/capabilities. My expectation is that eventually desktop functionality will become more and more subsumed into "mobile" platforms to the point where the differentiation becomes more and more blurred. For example, depending on the context in which a device is used, say connected to "KVM" devices, it will present more of a conventional desktop environment as the KVM can be leveraged.

    And there are many ways this could play out, especially where linux is the underlying OS. For example - present an android UI in mobile use, and Ubuntu in a desktop mode. Or maybe some new linux based hybridization, tizen, whatever.

    But clearly, a common CPU platform would more readily facilitate that convergence. And ARM would be a better choice, in my opinion, than Intel, because it would facilitate the "democratization" of CPU platforms as Android does for smartphone and tablet platforms.

    I'm not saying this would necessarily eliminate dedicated desktops. Some people will still need the level of functionality that can only be provisioned in a "fixed" desktop platform. But for many other typical users, desktop level capabilities with a smartphone or tablet may call into question the need for a dedicated desktop if a mobile device can be used to seamlessly fulfill both roles. And this is where 64bit ARM cores would be leveraged.

    Imagine if your smartphone or tablet had all the power and capability of your desktop and you could just sit at a desktop monitor, keyboard, and mouse, and do all your desktop stuff and when you get up an walk away with your smartphone, all the stuff is right there with you - no more syncing and moving stuff back and forth - it's just all right there already. And yes, you'd better be sure it's backed up and locked down, in that case.

  • Report this Comment On October 07, 2013, at 9:45 PM, ZipXap wrote:

    You have a few facts wrong.

    (1) Intel is currently leading the low-power consumption race. But they are not used in mobile devices because they are missing other ancillary functionality, such as a high performance multimode LTE modem, and graphics performance.

    (2) The ONLY reason we are even discussing the use of a common processor between desktop and mobile devices is because Apple screwed up big-time with their use of LLVM, rather than an architecture-agnostic VM like Dalvik (what Android uses). I suspect that, rather than inventing new hardware, Apple will probably make proprietary improvements to LLVM which will make iOS and OSX software run seamlessly across both ARM and Intel processors. But, we will just have to see what happens because when you have hundreds of billions of dollars sitting around, you're free to go lots of directions!

  • Report this Comment On October 07, 2013, at 10:38 PM, techy46 wrote:

    Intel needs Android more than Intel needs Apple. That's not good for Apple since Android cleaning Apple's clock in all markets except the US. If Apple ditches Intel right before Intel integrates LTE with Atom 14nm then Apple just might be ditched by Intel.

  • Report this Comment On October 07, 2013, at 11:39 PM, TMFDanielSparks wrote:

    @FoolSolo

    The link is from 2012, indeed. However it takes time for a processor to come to market on Apple's iPhone product cycles. So there's a good chance Apple was already thinking about the 64-bit architecture when Bloomberg talked with the Apple execs last year. The comments in the article suggesting that Apple is considering an architecture that could be used across mobile and desktop draws parallels to Apple's move to a 64-bit architecture with the 5s.

    http://www.bloomberg.com/news/2012-11-05/apple-said-to-be-ex...

    ZipXap, Apple seems to think their are better options given their choice not to use Intel. And I agree with your point on the power of hundreds of billions of dollars ;).

    And to everyone: Keep in mind this article is just referencing the possibility of the switch and the headline calls it a "small step." The nice things about small steps is that it's easy to backtrack.

    I loved all the comments. Thanks for the intelligent analysis.

  • Report this Comment On October 08, 2013, at 9:40 AM, auggybendoggy wrote:

    I have a hard time thinking I'll ever use excel on a tablet, much less a phone. The desktop won't be replaced. I can't blame Apple though on making it's demands. It's simply a way of putting pressure on mfg's so that they can improve their product. Lets face it, if the iphone dies, so will Apple. They need it more than MS needs a phone or a tablet.

    Intel still seems to me to be in a good position and I doubt they'll sit idle as things just pass bye.

  • Report this Comment On October 08, 2013, at 9:43 AM, sniperboy wrote:

    I predict that Apple will develop an innovative OS which will work on iPads and Mac computers. IT will be the first cross platform OS. Consumers will love it!

  • Report this Comment On October 08, 2013, at 10:19 AM, webguy76 wrote:

    The Motley Fool "writers" are so quick to bury any company not named Apple. Why such a pessimistic attitude towards these companies? My guess is that the guys in charge of Intel are highly intelligent and know what the industry/market trends are. Do you really think these guys are sitting i their office blindsided by what is going on in the smartphone industry? And at the same time you fail to see Apple's shortcomings. Granted these articles are entertaining, but no serious investor would ever take your "advice" seriously.

  • Report this Comment On October 08, 2013, at 10:47 AM, mw3051 wrote:

    hogwash.

    intel has some of the best chips regarding performance and energy consumed.

    where are the facts in this article ?

  • Report this Comment On October 08, 2013, at 2:52 PM, TMFDanielSparks wrote:

    @mw3051

    Thanks for your comment. The facts are that Apple has chosen to opt out of Intel's options for smartphones and tablets and that Apple has expressed concern about their options.

    Even more, in a recent interview with Apple CEO Tim Cook, Cook looks set on continuing with vertical integration. Here's Cook's quote:

    Now, we’re well beyond just the surface level of design of hardware and software. We’re deep in the guts. This week you saw the A7. You saw our new M chip. Well, these are only possible because many years ago we elected to start building our own silicon team, and now we have many, many people designing silicon.

    And you saw us go to 64-bit. Well, why are we able to do that first? It’s because we’re at that level of being vertical. Does anybody—do these other three companies have silicon expertise? You can answer that. Maybe they have something that I’m not aware of, but in terms of the depth of it …

    So it will be interesting in the next round, the next wave, to see what happens there. What do people do? When we looked at it, we concluded we needed to do our own stuff because we were dreaming of products that couldn’t be done with silicon that you could go buy. So we designed our own and built an incredible team.

    http://www.businessweek.com/articles/2013-09-20/apple-ceo-ti...

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2672615, ~/Articles/ArticleHandler.aspx, 10/31/2014 5:53:33 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement