Recently Intel announced new Ivy Bridge core parts that can go down to the 7W TDP. I expect in the next couple of months, with introduction of Haswell (Intel's fourth generation Core) we should see ultra ULV Haswell parts that can go down near the 4W TDP. In 2014, Intel will introduce the fifth generation core called Broadwell which will use the 14nm process (to be introduce in 2013). By that time we will see that Intel's core has reached under the 2W TDP power envelop. This means that the Intel core CPU products can now go into a phone; it will have reached the point where it can directly compete with arm chips in terms of power consumption. As you can imagine, with 2014 only less than 2 years away, there is just absolutely no way arm will have anything near close enough to compete with Intel.
What does this all have to do with Apple? Well, in 2014, it just so happens that Apple's contract with Samsung ends. My belief is that the recent rumor about Apple engaging with Intel to do their foundry work and having an Intel SoC inside the next iPad makes perfect sense. Apple is all about having the best hardware for the best design. In 2014, the Broadwell SoC will be in a class of its own. Arm's very best will only be good enough to compete with Intel's lower end Atom SoC.
Apple partnering up with Intel gives them 3 options in terms of their product lines:
1) Keep the current iPhone running arm, while the iPad in 2014 can run the Broadwell SoC.
2) Switch completely to Intel for both their iPhone and iPad. This gives them ease of maintainability because all their products will be running x86. This also gives their product a differentiator from the rest of the arm-based phones and tablets out there. Intel's Broadwell will be far superior to the rest of the market. However, the disadvantage will be that they will be dependant solely on Intel for all their products.
3) keep the current iPhone and iPad running on arm, but in 2014, develop a new high-end product lines of iPhone and iPad running the Broadwell SoC. Even though they have to maintain iOS to run on both arm and x86, the advantage with this model is that they are not totally dependant on Intel and can slowly develop the arm-base SoC to hopefully be competitive with Intel's in the future.
Option 3 is probably most likely since it is good for both companies. Intel would be willing to do the foundry for Apple's arm SoC in this situation because Apple will have to differentiate between the low-end products (arm-based) and the high-end (Intel) so in a sense there is no direct competition with Intel.
When i posted this scenario some time back, someone commented that Apple's current iPhone is already high enough. And in my previous posts someone again mention that arm has "good enough" products and doesn't need to get to the performance level of Intel. I have to disagree with this line of thinking. There is distinct advantage to having the best product. Think about it from the position of EOMs. Given the choice between a SoC that performs better and one that only performs "good enough" which one would you rather put in your phone? Certainly cost of the SoC comes into play. Since an arm-base SoC will not be able to compete with a Broadwell SoC, Intel can definitely price the Broadwell SoC for a premium. On the low-end where arm will be competing with Intel, what if Intel's low-end Atom SoC performs better than arms' SoC and the cost of each is about the same? which one would you pick if you were an EOM/phone maker? Certainly, you will go with the Atom. This is exactly the scenario that will play out when Intel releases their next Atom. EOMs/phone makers will start choosing Intel's Atom over arm's.
In 2013, Intel will start establishing itself in the market in preparation for 14nm in 2014. Atom SoC for low-end, Broadwell SoC for high-end.
Here's an interesting perspective from manufacturing process:
What Apple is doing in New York
There have been a few rumors about what Apple is going to do to get away from fabricating their mobile processors at industry rival Samsung's Fab. Amongst these are rumors that they are negotiating with Intel and that they are looking to invest directly in a fabrication plant in the New York area.
To understand what these rumors could mean, it is important to understand the chip fabrication landscape. There are three leading electronic process development efforts going on the world today that can be categorized as leading edge. They are Intel, TSMC and the IBM Alliance. The IBM Alliance includes major chip developers IBM, Global Foundries, Samsung and a number of other smaller players. This means that Apple currently is designing chips for IBM Alliance technologies and it would be simplest for them to continue to do so.
It just so happens that there is a joint Fab effort in upstate New York that is run by IBM Alliance companies IBM, Global Foundries and Freescale Semiconductor. It would be relatively easy for Apple to get involved in the effort there and have more control over their fabrication destiny.
While becoming an active member of the IBM Alliance process technology and fabrication consortium is an obvious reason for Apple to be interested in upstate New York, it isn't the only possibility. They could also be interested in the area for the same reasons that the IBM Alliance has an effort there: favorable taxes and regulations from the state of New York and access to a sizeable technical talent pool in the New England region. So, it isn't absolutely impossible that they are exploring a partnership with TSMC similar to the one they have with Foxconn for assembling their hardware.
The real question is why are they talking to Intel? The answer to this is that they likely are worried about making a big investment in process technology that will not be competitive in the next few years. Intel has the best fabrication technology period, end of story. Further, there is some risk that IBM and/or TSMC will not be able to continue the huge investments necessary to keep up with Intel's breakneck pace. This is another reason why TSMC is an unlikely choice. Not only would it be more work to ally with TSMC, they have the lowest performing process technology of the three.
This leads me to believe that Apple is weighing the alternatives of becoming a partner in the IBM Alliance and purchasing their chips from Intel going forward. They are weighing the per unit cost of going with Intel against the risk of becoming invested in the very costly business of electronic IC fabrication.