Please ensure Javascript is enabled for purposes of website accessibility

A Major Roadblock to Apple's In-House Mac Processor

By Ashraf Eassa - Apr 13, 2018 at 6:05AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If the tech titan wants to build its own chips, it has a lot of work to do.

Apple (AAPL 2.62%) intends to design its own processors for future versions of its Mac personal computers, according to Bloomberg. That means the company will be replacing chips supplied by chip giant Intel (INTC 2.46%) -- an effort that is being referred to internally as Kalamata.

Although Apple is certainly capable of developing high-performance processors and has nearly infinite financial resources at its disposal, the reality is that this purported transition away from Intel-based processors and toward Apple-designed ones won't be easy.

An Intel laptop chip.

Image source: Intel.

At a bare minimum, Apple will need to get software developers to recompile their code for the ARM architecture upon which these chips will be built, which will have its own challenges.

And there's another aspect to this whole initiative that people don't seem to be talking about: the sheer number of chips that Apple would have to develop.

A wide product line-up requires more chips

These days, Apple releases roughly two applications processors each year -- a new iPhone chip and a beefed-up version of that chip for the iPad (or as has been the case recently, a beefed-up version of last year's iPhone chip).

For the Mac, however, Apple would need to design a lot of chips, including distinct options for each of the following products:

  • 12-inch MacBook
  • MacBook Air
  • 13-inch MacBook Pro
  • 15-inch MacBook Pro/iMac
  • Mac Pro

I count no fewer than five chips here. Even if you wanted to go out on a limb and say that the 12-inch MacBook and even the MacBook Air could use the same processors as the iPad Pro, Apple would still need to develop three distinct chips.

Now, those chips would share some similarities -- they'd probably incorporate the same basic intellectual property (e.g., CPU cores, graphics processor, and so on) as the iPhone and iPad chips, but they'd come in drastically different proportions and would likely require unique interconnect designs (the technology that connects all the individual computing elements). Such an endeavor would be quite expensive, with the problem exacerbated by the fact that Apple would need to amortize that development cost across a relatively small number of chips (Apple only sells about 20 million Macs per year).

For some context, Apple doesn't even find it worthwhile to develop distinct processors for its standard-sized iPhones and its larger-screen models, even though there would be clear benefits for it to do so. In light of that, it's rather astonishing to think that Apple would want to replace Intel across the entirety of its product line.

A more sensible approach

It's clear that Apple can design better processors for very low power envelopes (e.g., 5 watt power consumption) than Intel can, since Apple targets its intellectual properties specifically to those power envelopes, while Intel tries to address a broader range of power consumption with a core set of technologies.

It'd be smarter, then, for Apple to replace Intel-based processors in its 12-inch MacBook using the same processor that it uses in its iPad Pro lineup and then continue to use Intel-based chips in the higher-performance/higher-power models (MacBook Pro, iMac, and Mac Pro).

In fact, I wouldn't be at all surprised if that's the path that Apple ultimately takes. Such a scenario wouldn't require undue effort on Apple's part (since it'd be utilizing a chip that it's already developing for the iPad), and it'd bring Apple's technology to a product category where it has a clear competitive edge over Intel's offerings.

Ashraf Eassa owns shares of Intel. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$169.24 (2.62%) $4.32
Intel Corporation Stock Quote
Intel Corporation
$35.37 (2.46%) $0.85

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.