Mighty Intel feels Apple chill

Intel shares plunged 9% midday Monday on report that Apple will be rolling its own.

From Bloomberg developing:

Apple is planning to use its own chips in Mac computers beginning as early as 2020, replacing processors from Intel, according to people familiar with the plans, Bloomberg News’ Ian King and Mark Gurman report.

My take: Intel is not the first supplier to get burned by Apple insourcing, but I can’t remember a bigger one.

6 Comments

  1. David Drinkwater said:

    Apple will not be building the chips, though. Apple will be designing them. It is entirely possible (though highly improbably in a fabless environment) that Intel will still be manufacturing the chips. I suspect that, even with Apple’s “high” volume (which is really small on computers, laptop or desktop), Apple would not be sufficiently large to convince Intel to retool manufacturing. My guess is that this would be good for TSMC. or, maybe, if Apple really want to invest at home, GlobalFoundries – or god forbid, Samsung. Whatever Apple designs is going to be at a very high technological node, and they will demand volume. It’s a very risky proposition to buy into – as we see in Intel’s share price today – and Intel is a huge business in its own right, totally not dependent on Apple to make a living.

    3
    April 2, 2018
  2. Tommo_UK said:

    Intel won’t be building these. They’re too expensive, and the technology is not something Apple will want to share.
    My guess is Apple help an existing fab build-out its capacity just as it did with NAND to ensure supply and a dependency on Apple’s business. I believe they’ve recently deepened their partnership with TMS.
    JVs and pre-purchasing supply to ensure smooth logistics is pure TC and why the iPod was able to dominate so quickly – there simply wasn’t any mor4 NAND supply around for the competition no matter how much they may have thought they had competing devices.

    0
    April 2, 2018
    • Gregg Thurman said:

      “My guess is Apple help an existing fab build-out its capacity just as it did with NAND to ensure supply and a dependency on Apple’s business.”

      I don’t see production capacity as an issue.

      Not counting Apple Watch, Apple TV and HomePod Apple consumed 279,760,000 processors during FY2017. Of those 19,251,000 were Intel chips (6.9% of total).

      With iPhone and iPad unit sold going flat due to market saturation I think TSMC could handle volume increase, caused by Mac ARM chip production, with existing capacity.

      0
      April 2, 2018
  3. Gregg Thurman said:

    Looking at AAPL’s share volume and money flows today, I believe today’s selloff was driven by retail Intel traders operating from fear. The institutions (block trades) were taking advantage and buying.

    AAPL was #1 on the Buying on Weakness chart.

    1
    April 2, 2018
  4. David Sauceda said:

    Link 1) https://newsroom.intel.com/news-releases/intel-supports-american-innovation-7-billion-investment-next-generation-semiconductor-factory-arizona/

    Link 2) https://newsroom.intel.com/wp-content/uploads/sites/11/2016/01/Intel_POTUS_visit_backgrounder_online_version.pdf

    I supply commodity products through electrical wholesalers for Intel’s current $7B “Fab 42” factory in Chandler, Arizona (Link 1). I also visit the site every six weeks, and with each visit, I’m amazed at the project’s rapid growth expansion. Rumors I hear through electrical distributors and contractors is that Intel is building the factory to develop further a stronger relationship with Apple … since the first build between 2011-2013 failed to attract chip buyers for the 14-nanometer chip.

    To my knowledge, Intel completed the build of Fab 42 back in 2014, and I believe it was for their Atomic Chips. However, as soon as it was finished, the technology was out-dated according to several of my clients. The plant then sat idle until Spring 2017 when a secondary (or extension?) plant started its build-up for 6-nanometer chips. With an original cost of $5.3B (Link 2) and an additional cost of $7B, that’s a total over $12B out of $18B Intel scheduled for domestic manufacturing and R&D.

    I wonder how Intel is feeling right now giving this latest rumor.

    0
    April 2, 2018

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