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Can Apple Chips Hurt Intel?

Sejuti Banerjea

A Bloomberg report said that Apple AAPL, which has been rumored to be making its own ARM-based chips for Macs for a while now, is finally in a position to announce them at its WWDC annual developers conference a couple of weeks later.

This doesn’t mean, of course, that the chips will be immediately available. Usually, an announcement means that they are likely through with tape out. If all goes well, the chips would be in Apple devices some time next year.

And that’s the crux of the matter. Nothing is expected to happen this year and even if it’s announced, we don’t know for sure that this iteration of the chips will actually find their way into Apple devices.

While ARM designs consume less power, they haven’t been able to beat Intel INTC designs in performance. Not yet, anyway. So it seems extremely unlikely for Apple to go this route.

Unless, and this is a possibility worth considering, Apple is looking to make a lower-end version of its Mac running on ARM chips. Apple could be following the same strategy that it did with the iPhone SE, i.e., making products at multiple price points to target different users. This doesn’t seem to be a far-fetched idea, especially considering that people are likely to be more conservative spenders in a post-COVID world.

There could also be a version using Advanced Micro Devices AMD silicon. AMD is giving some real competition to Intel on the performance front as well, so that’s another possibility Apple could be considering. And since both Apple and AMD use Taiwan Semiconductor TSM as their foundry, it could all be rather smooth.

As far as Intel is concerned, it’s unlikely to get a bloody nose. For one, the company has been defocusing the PC side of its business as it targets the data-centric side. There’s a ton of things going on there where it’s doing rather well. Intel is deeply involved in the expansion of the cloud, AI, the growing interconnectedness of all things (IoT), self-driving cars and ADAS, to name a few. The company’s data-centric business grew 34% year over year to contribute 51% of its revenue in the last quarter.

Since Apple’s announcement won’t bring any immediate changes, Intel will continue to enjoy the benefits of workloads shifting to homes, both on the PC side (as home offices are set up) and on the cloud side (as these offices connect). There’s also a ton of storage, networking and communications tech being deployed there, all of which will strengthen its business in the next few quarters. Also, having made these investments, companies/individuals are unlikely to upgrade/change the very next year. Apple is more likely to score with individual deals at enterprise customers, as has been its strategy in the past.

So this bit of news is a positive for Apple, as it will help the company to lower cost and possibly compete for some lower-end business that will add to its premium business. But it isn’t something Intel investors need to be overly concerned about because Apple is not a very big customer, because it may not sift away entirely and because some share loss to AMD was already in the cards.

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