Intel stock was already having a bad day, down over 5%, when it suddenly tumbled even lower, plunging as much as 8.8%, its biggest slide in over 2 years, following a Bloomberg report that Apple is planning to use its own chips in Mac computers beginning as early as 2020, and replacing processors from its existing partner, Intel. According to Bloomberg, the initiative, code named Kalamata, is still in the early developmental stages, but comes as part of a larger strategy to make all of Apple’s devices – including Macs, iPhones, and iPads – work more similarly and seamlessly together, said the people, who asked not to be identified discussing private information. The project, which executives have approved, will likely result in a multi-step transition. The shift would also allow Cupertino, California-based Apple to more quickly bring new features to all of its products and differentiate them from the competition. Using its own main chips would make Apple the only major PC maker to use its own processors.
Dell Technologies Inc., HP Inc., Lenovo Group Ltd., and Asustek Computer Inc. Use Intel chips. By using its own chips, Apple would be able to more tightly integrate new hardware and software, potentially resulting in systems with better battery life — similar to iPads, which use Apple chips. Needless to say, the shift would be a crushing blow to Intel, “whose partnership helped revive Apple’s Mac success and linked the chipmaker to one of the leading brands in electronics.” Apple provides Intel with about 5 percent of its annual revenue, according to Bloomberg supply chain analysis.
The money that separates the two 15-inch Retina MacBook Pro models is a hefty chunk of change; the $2,799 MacBook Pro is the top-of-the-line Mac laptop, offering the strongest performance.
Meanwhile, as, it’s not as though the loss of Apple can be made up with growth from other Windows-based PCs which, as the Gartner table below shows. While Bloomberg hedges that Apple could still theoretically abandon or delay the switch, judging by the stock reaction that’s not too likely. Posted in Post navigation.
FILE PHOTO: A man is reflected in a Apple store logo in San Francisco, California, U.S., August 21, 2017. REUTERS/Kevin Coombs/File Photo The initiative, code-named Kalamata, is still in early developmental stages but is part of a bigger strategy to make Apple’s family of devices work more similarly and seamlessly together, according to the report. Apple, which has used Intel chips in its computers since 2005, and the computer chipmaker both declined to comment. Intel shares closed down 6.1 percent at $48.92, while the tech-heavy Nasdaq ended down 2.7 percent. Stifel analyst Kevin Cassidy said in a note he believed the market was “over reacting” to the report on Apple’s plans and that Intel’s prospects remained good. “We do not expect any other PC manufacturers will consider designing its own CPUs,” he wrote in the note. Other analysts said Apple would likely phase Intel’s chips out over time.
“While it’s possible that Apple may replace Intel in some of its lower-end product lines, we think it will be difficult for Apple to completely replace Intel by 2020, especially on its higher-end offerings,” said Summit Insights group analyst Kinngai Chan. The Mac plays a small part in Apple’s overall financial picture, with sales of 19.2 million units last year and accounting for 11 percent of Apple’s $229.2 billion in revenue for fiscal 2017. But while the laptop and desktop computer market has been in a years-long slump amid the rise of smartphones and tablet computers, Mac sales rose 4 percent in 2017.
The growth came even as PC sales declined slightly to 259.5 million units, the smallest drop since 2011, according to data from research firm IDC. While Apple’s reported move away from Intel would be a major shift for its Mac lineup, it follows years of increasing focus on designing its own chips for its devices. The company has been designing its own iPhone processors since the release of the iPhone 4 in 2010 and has steadily increased the amount of chip work it handles itself. “We can push the envelope on innovation.
We have better control over timing, over cost and over quality,” Chief Financial Officer Luca Maestri said of Apple’s chip efforts last year.