Intel is Walking on Eggshells After Losing Apple's Chip Business
Intel Corp. will be able to survive without Apple Inc's demand for its chips, but Intel is walking on eggshells, according to the Wall Street Journal.
Apple announced on Monday that it would no longer outsource chips for Mac computers. This move was long overdue, Apple has been designing its own chips for iPhones and iPad since 2008. The company has been vocal about the increased performance of devices that run with their own chips.
Intel isn't taking a huge hit with the loss of Apple's business. According to UBS analyst Timothy Arcuri, Apple accounts for only 2 to 3 percent of Intel's annual revenue and Apple demand will be weaned off over the next two years. Furthermore, the Mac has a very small market share in the PC industry. According to IDC, Apple has averaged approximately 8 percent of global PC shipments over the past 5 years.
However, this move adds to the difficulties Intel is facing in the PC business. If Apple is able to develop chips that exceed the performance of Intel versions, it could hurt business even more. Intel has a massive share of the PC-and-server-processer market due to its x86 chip being considered the superior option over ARM-based architecture. So far, PCs that run with ARM haven't been successful, but a sufficient ARM-based Mac could cause problems for Intel by “stimulating broader acceptance of non-x86 alternatives.”
There are also concerns that Apple might start a trend and encourage other companies to make in-house chips. However, this concern isn't plausible considering most companies don't have the resources, and Apple's annual R&D expenditures are around $17.4 billion, a sum more than double the budget of other companies Intel supplies. It also took Apple over a decade to start producing its own chips.