Report: Intel in Talks With Apple to Manufacturer iPhone, iPad Processors
March 7, 2013 2:11 PM
comment(s) - last by
Reportedly no definitive agreement has been reached, but Apple is keen on moving away from Samsung dependence
The Chicago Tribune
reports that Intel Corp. (
) has been in talks with Apple, Inc. (
) to establish a foundry relationship. The possible hookup could also see Intel co-design the company's next generation iPhone and iPad processors, based on a future Atom mobile processor.
I. New CEO, New Partnership With Apple?
Intel is in the process of finding a new CEO since
announced in November that he
would be retiring
after eight years in the position. The new Intel CEO is expected to face substantial pressure to
step up mobile efforts
, as device sales continue to move away from the traditional PC.
Intel's smartphone chips are currently
faster than some
, but not all ARM processors. While Intel enjoys approximately a two year edge in semiconductor manufacturing process over the market leaders -- ARM Holdings Plc (
) licensees Qualcomm, Inc. (
) and Samsung Electronics Comp., Ltd. (
) -- its smartphone chips aren't quite as far ahead, as they're currently on Intel's older 32 nm node.
Intel is rumored to be in talks to make chips for Apple devices.
[Image Source: Press Photographers Assoc. of Ireland]
latest Atom smartphone processors
are surprisingly decent in power consumption, but fail to beat the best of the ARM crop in speed. One issue is core-count; Intel only currently makes single-core smartphone chips. Most top ARM smartphone chips are quad-core. That should soon change as Intel is expected to launch multi-core x86 smartphone processors early next year.
Apple declined to comment on the report of smartphone processor talks. An Intel spokesman Chuck Mulloy commented that Intel is in constant talks with Apple, who is a top buyer of its PC processors, but refused to comment on the specific rumor of an iPhone/iPad tie-up.
II. Potential Deal Would Likely Begin Solely as a Contract Fab Business
A partnership with Apple could begin with a mere foundry relationship, according to the report's sources. Many of Intel's older foundries are still as advanced or more advanced than foundries of rival chipmakers like Samsung. And many operate at less than full capacity, raising the possibility of production for a third party.
Such a deal -- making Apple ARM processors on older Intel fabs -- might be attractive to Apple as it would reduce
dependence on arch-rival Samsung
Electronics, who currently manufactures most of Apple's smartphone and tablet processors.
Pat Becker Jr., of Becker Capital Management, whose firm owned $39M USD worth of shares of Intel stock last year, is quoted as commenting, "If you can have a strategic relationship where you're making chips for one of the largest mobile players, you should definitely consider that. And for Apple, that gets them a big advantage."
The Brains of the iPhone are currently made by arch-rival Samsung at its new Austin, Texas factory. [Image Source: iFixIt]
Analysts and shareholders have been pushing Intel, not only to get more aggressive on mobile, but get into the contract foundry business as well. They argue contracts to make third-parties' chips can help Intel absorb the high cost of deploying new process technologies and weather the periodic downward swings of the device/PC market.
JMP analyst Alex Gauna comments, "This is potentially huge. The new CEO will have a very large opportunity to take this to the next level. Those discussions about taking on Apple as a foundry customer are going to be very complex and very contentious."
Macquarie analyst Shawn Webster estimates that Intel could make $4.2B USD extra in revenue a year by 2015, with a 50 percent gross margin, if it switches its idle capacity to producing iPhone and iPad chips.
III. Contract Manufacturing -- More Stability, But Lower Margins
But there are concerns. The 50 percent figure quoted by Mr. Webster is significantly lower than Intel's total overall margin of 60 percent. It's more typical of less profitable fab giants like Taiwan Semiconductor Manufacturing Comp., Ltd. (
) (TSMC), whose margin last year was 48 percent.
But slowing sales have forced Intel to already sign a number of contracts with smaller third-party terms to pick up a bit of the idle capacity.
And Intel just
for its first contract fabrication with a larger firm -- Altera Corp. (
), a top player in the field of programmable logic devices (including FPGAs) which are commonly used in automotive and other embedded applications.
Altera will make its FPGAs at Intel Fabs. [Image Source: Wikimedia Commons]
Financial terms of the deal were not publicly disclosed. Intel is expected to start making Altera's FPGAs on its
upcoming 14 nm node
, which will land in 2014.
The Chicago Tribune
This article is over a month old, voting and posting comments is disabled
3/8/2013 3:47:01 PM
I think there is possibility of collaboration between Intel and Apple like this:
1. Intel provides fundry service for Apple
2. Intel and Apple jointly design highly customerized X86 mobile processors specifically for Apple (e.g.,such as Siri capability). Intel still designs and sells general purpose (or with Apple-specific features disabled) mobile processors to other customers
3. Apple spend some of the cash pile to pay to build/use a dedicated Intel fab, or just purchase a significant amount of Intel shares
End result: Win-Win
Intel will get lots of money, and more improtantly market share in moble space.
Apple will have a unified processor platform across all of their product lines, paving the way for unified OS in the future.
RE: Possible collaboration
3/8/2013 5:31:04 PM
Correct me if I'm wrong, I read it as Intel effectively leasing their fab(s) to Apple for their ARM chips.
I would be very surprised if Apple were to jump aboard the x86 ship for mobile, considering their history with ARM and their concerted effort to move computing exclusively to ARM platforms.
It's Microsoft that surprise me; RT was their slow attempt to begin migrating to ARM, and Intel know it. Of course, it's much harder considering they are to Apple in the PC space what Apple is to them in mobile. This is precisely the reason I believe Microsoft need to or should have gone x86 with WP8. The Microsoft store would be on 1 unified platform not 2. Maybe this is for WP9 timed to Atom 22nm?
"It looks like the iPhone 4 might be their Vista, and I'm okay with that." -- Microsoft COO Kevin Turner
Intel: ARM Chips Are Propellers, We Build Jet Engines
February 27, 2013, 2:30 PM
Ireland Rewarded With Sprawling $4B USD Intel 14 nm Chip Plant
January 24, 2013, 5:50 PM
Samsung Shys Away From Apple, Plans To Sell Chips to Chinese Smartphone Makers Instead
January 10, 2013, 11:14 AM
Paul Otellini to Retire, Even as Intel Faces Critical Test
November 19, 2012, 11:46 AM
IDF 2012: Intel Presents the Future of Atom Chip Powered Smartphones
September 12, 2012, 3:45 PM
HTC One Leaks: LED Smart Cover, Carrier Models, Google Play Ed.
March 11, 2014, 5:30 PM
New HTC One Camera Details Revealed via Leaked Ad
March 11, 2014, 9:20 AM
India Could Rock Google With Its Biggest Antitrust Fine Yet -- $5B USD
March 10, 2014, 8:12 PM
Apple Releases iOS 7.1, The First Major Update to Its "Rethought" Mobile OS
March 10, 2014, 1:52 PM
BlackBerry CEO Jokes that iPhone Users are "Wall Huggers"
March 10, 2014, 12:20 PM
Average Mobile Phone Bill in U.S. is Growing Despite Competition
March 10, 2014, 10:25 AM
Most Popular Articles
Bitcoin King Pt. II: Mt. Gox's Dictator Karpelès Proves Tragically Flawed
March 7, 2014, 1:12 PM
Bitcoin King: Mt. Gox CEO Mark Karpelès' History of Arrests, Firings
March 5, 2014, 9:05 AM
Windows 8.1 Update 1 Leaked Early
March 7, 2014, 9:30 AM
Apple Won't Let UK Sons Unlock Their Deceased Mother's iPad
March 6, 2014, 12:44 PM
Lt. Gen. Davis Says Next Gen USAF Bomber Will "Of Course" Surpass $550M/Unit
March 6, 2014, 9:45 AM
Latest Blog Posts
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
Justice Leaks Details of Next HTC One Two Flagship Phone
Dec 5, 2013, 4:04 PM
Global Cyber Espionage Concerns Reveal Growing Cyber Armies
Nov 29, 2013, 11:04 AM
Is The Period Becoming an Expression of Anger?
Nov 26, 2013, 2:02 PM
NSA and Congress -- You Will Never Kill the Constitution, It's an Idea
Nov 10, 2013, 2:00 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information