Silicon Valley is preparing to face the impact of the separation of Apple and Intel, which not only marks the end of the most influential cooperation in the technology industry but also marks Apple’s determination to further control its products and processes. manufacturing. While this move will not affect Apple’s image, we cannot say the same for Intel, so it is expected that the company’s shares will devalue as soon as the news is confirmed next Monday during the 2020 World Developers Conference. (WWDC 2020).
Luckily for Intel, the devaluation should be low, since Apple represents less than 5 percent of the company’s annual sales, that is, about $ 3.4 billion. On the other hand, Apple will only replace the processors in some specific products, since there are products where it cannot replace an x86 processor with an ARM, so it is estimated that Intel will reduce the demand for its silicons by almost half. As we will see, in the long run, this is very bad news for Intel.
Apple’s move shows that the tech giant is increasingly aggressive in expanding its capacity and reducing its dependence on the main partners that have served them for years. The main beneficiary of this movement is TSMC, which although it has been producing the processors that give life to iPhone and iPad mobile devices for years, with great success, will now also be in charge of expanding its production, since these same processors, in vitaminized versions, they are chosen to give life to a new generation of the company’s desktop and portable computers.
Since 2005, all Mac computers have used the same Intel processors that could be found in any other computer on the market, and this really is not good at the optimization level, and that is why developing your own processor will give Apple greater control over how Mac computers work and behave. Although these processors use the ARM architecture, ARM has given Apple permission to have custom designs to suit their needs.
One of the great reasons for this movement is linked to the manufacturing processes of Intel itself, and that is that in 2015 it already promised to make the jump to 10nm, and finally this jump began in a timid way in September 2019 with its laptop-only Ice Lake processors. To this day, things have not changed when their direct rivals, TSMC and Samsung, are no longer settled with a mature 7nm manufacturing process, but they already have the 5nm manufacturing process ready.
” Intel is 12 months behind, maybe even 18 months [relative to its competition], ” said Handel Jones, CEO of International Business Strategy.
According to three experts, Apple is also being sold because of Intel’s numerous production errors. Recall that Intel collapsed in the face of a sudden surge in processor demand as it transitioned to 10nm, resulting in a shortage of production and last year reduced silicon sales to certain PC manufacturers, resulting in which resulted in many manufacturers not reaching the expected income. These factors have greatly affected Intel’s image as a trusted manufacturer.
“I think this may inspire other companies to focus on non-Intel processors. In terms of reputation, this is not a good thing for Intel,” said Moor Insights & Strategy analyst Patrick Moorhead.
A clear example we see in Microsoft, one of the big long-term partners of Intel is already selling laptops with Qualcomm ARM chips. However, analysts say that its performance is not compatible with models that use Intel technology, and that is why Microsoft is also tightening its collaboration with its main rival, AMD.
Another trend that makes it easier for Apple to consider this change is that more and more people use web-based software (Office 365, streaming games, etc.) instead of software that runs on computers, and if Apple ultimately maintains sales, It is logical to expect that many other manufacturers seek to match this movement.