Would Intel make Apple's chips in future?
Analyst speculates that Intel could turn foundry to ease Apple's supply constraints, while demanding new slots for x86
Published: 3 December, 2012
The future relationship between Apple and Intel is a popular topic of speculation and rumor, often involving a possible ousting of Intel from the Mac family. However, the latest twist is more optimistic about the chip giant - analyst Doug Freeman of RBC Capital Markets thinks Intel could win a foundry deal from the iDevice maker.
Apple has been making itself increasingly self-sufficient in silicon, designing its own processor for the iPhone and iPad. This uses a customized version of the ARM core, and is currently manufactured by previous chip design partner (and now bitter enemy) Samsung. This has given rise to periodic rumors that Apple would extend its processor design into the Mac products, replacing Intel's x86-based chips.
Even if that happened, the consolation for Intel could be a contract to manufacture the ARM-based chips. Apple has been looking for an alternative to Samsung as its foundry, and working with TSMC of Taiwan - although for now the transition has been hampered by problems in getting to the right quality and volume levels, and by contractual commitments to Samsung until 2015. Intel, meanwhile, has been making chips for a couple of small third parties, which many take to be a sign that it wants to get into the foundry business, to generate another revenue stream from its massive investments in advanced processes. It may have used recent breakthroughs like its 3D transistor design to lure Apple, say some sources.
Freedman believes Apple may be considering a deal under which Intel would make the iDevice processors in return for x86 chips remaining in the MacBook, or even appearing in some high performance mobile products such as future top end iPads. "We believe Intel has the upper hand due to the limitations of capacity at alternative sources ... as the demand is outstripping Apple's ability to add supply," Freedman wrote in a client note, quoted by CNet.
An industry source told the news site that the two US giants have held on-off talks over the past two years about a possible foundry deal, but that Intel would demand a big incentive to agree to help Apple out with its capacity challenges - which will worsen if it cuts ties with Samsung. Several Apple launches have suffered from shortages of key components and major mobile players are acutely aware of the risk of supply constraints. These hit Qualcomm's performance earlier in the year and in this area, Apple and Qualcomm are not in their usual strong negotiating position against supply chain partners. Both were reported to have been rebuffed earlier this year, when they tried to secure exclusive capacity at TSMC, the world's largest contract chipmaker.