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Apple Inc. and Intel Corporation: April Fools' Joke Gone Wrong

By Ashraf Eassa - Apr 4, 2016 at 8:45AM

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Don't get fooled by this April Fools' joke.

Image credit: Apple. 

There has been a lot of hope on the part of some Intel (INTC 2.46%) bulls that Apple (AAPL 4.08%) will either use Intel-designed modems or Apple-designed-but-Intel-manufactured applications processors in coming iPhone models.

On April 2, author Manikandan Raman with Benzinga penned a piece "explaining" the reasoning behind Apple's "announcement" that it will be using Intel-designed applications processors in future iPhone and iPad devices, citing a forum post on SemiWiki by Semiconductor Advisors' Robert Maire.

Unfortunately, the author of this article should have realized that this was a not-so-subtle April Fools' day joke.

How can you tell?
First of all, the "joint announcement" claimed in the SemiWiki forum post and regurgitated in the Benzinga article is nowhere to be found on Apple's or Intel's respective websites. That, aside from the fact that this was posted on April 1, should have been a pretty big tip-off.

However, even if one doesn't allow those two facts deter them, the "quotes" included in the "report" are very clearly fabricated and are intended to be humorous.

Indeed, the crux of the joke is that if Apple were to try to run its pre-existing iOS software on an Intel processor, the processor would be unable to understand any of the code, rendering the device 100% unusable. This "un-usability" would mean that the device would be "un-hackable" by entities such as the FBI because the device couldn't do anything.

Why write about this?
Normally, it wouldn't be worth this Fool's time to write about what is very clearly an April Fools' joke. However, the fact that this "story" was picked up by a reputable site such as Benzinga and is being circulated means that there will probably be some investors who believe this "report" -- at least for a time.

The problem with "believing" this report is that if Intel were to actually manufacture all of Apple's A-series chips from here on out, this would probably cause something of a seismic shift in the semiconductor industry.

In this case, Intel would get a ton of quite-profitable leading-edge foundry work while Taiwan Semiconductor (TSM 3.04%) and Samsung (NASDAQOTH: SSNLF) would be "looped out" of Apple's chip manufacturing plans going forward, as it were. Given how important Apple is to the foundry landscape, this would be a big deal.

What's actually going on?
Intel is not expected to manufacture the applications processors that will go into Apple's next-generation iPhones or iPads. It is generally believed that Taiwan-based contract manufacturer TSMC will build the A10 chips for the next generation iPhone 7-series processors. Beyond that, there haven't been any confirmations of Apple's process choices for future Apple processors.

That being said, TSMC executives have stated that it intends to start the 10-nanometer chip manufacturing technology generation with "a very high market share" and "[TSMC] intend[s] not to lose it." This is probably a good indication that Apple will build the majority of its next-generation 10-nanometer processors at TSMC, rather than at either Intel or Samsung.  

There are also rumors that Intel may end up sharing the cellular modem spot with Qualcomm (QCOM 3.65%) inside the next-generation iPhone 7-series phones expected to launch in the fall of 2016.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$149.64 (4.08%) $5.86
Intel Corporation Stock Quote
Intel Corporation
INTC
$44.55 (2.46%) $1.07
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
QCOM
$139.76 (3.65%) $4.92
Taiwan Semiconductor Manufacturing Company Limited Stock Quote
Taiwan Semiconductor Manufacturing Company Limited
TSM
$93.77 (3.04%) $2.77

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