Apple Inc. said it plans to sell Mac computers using processors designed in-house, signalling an end to its 15-year alliance with Intel Corp.
Tim Cook, Apple’s chief executive officer, described the move as a major transition for the Mac. “The Mac is transitioning to our own Apple silicon,” Cook said Monday at a virtual conference for software developers. “When we make bold changes, it’s for one simple yet powerful reason: so we can make much better products.”
The partnership between Apple and Intel was formed in 2005 when Steve Jobs outlined a move away from PowerPC processors onstage at the same Apple event series for developers. Intel helped Apple catch up to Windows computers, some of which were more powerful at the time. In tandem, though, Apple was working on more energy-efficient chips for mobile devices based on Arm Ltd. designs and continues to use those to power the iPhone and iPad.
In recent years, the speed and power efficiency of Apple’s mobile chips have rapidly increased, while the pace of improvement to Intel’s parts has slowed. This irked Apple executives, who pushed the company’s silicon unit to develop more powerful processors fit for the Mac, people familiar with the matter have said.
The split from Intel has been a long time in the making. As far back as 2012, Apple was exploring a switch to its own chips, Bloomberg reported at the time. In 2018, Bloomberg reported that Apple would formally begin the transition away from Intel in 2020.
In addition to ensuring legacy software runs well on the new Macs, a challenge for Apple will be to make processors speedy enough to replace Intel chips in its “pro” line of computers.
The Mac is no longer the key revenue driver for Apple that it once was, but it safely sells about 20 million unit a year, delivering about $25 billion in revenue. The computers are also key for Apple to retain its professional market, which helps spur purchases of more popular devices like iPhones, AirPods and Apple Watches.
For Intel, a break with Apple is more of a symbolic blow than a financial one. The entire Mac laptop lineup represents less than 5% of Intel’s annual revenue, according to an estimate by Stacy Rasgon, an analyst at Sanford C. Bernstein.
The bigger concern is that Apple could embolden other computer makers to make similar moves, he said. “Now you have an actual PC that can run on something that’s not Intel.”Intel, the world’s largest chipmaker, has shrugged off attempts to unseat its dominance of personal computing for decades.
Its only direct rival today is Advanced Micro Devices Inc., which has produced newer processors that have begun to take share over the last two years. But AMD’s revenue is still less than 10% of that of Intel.
Other efforts to break Intel’s lucrative grip on computer processors haven’t made much of a dent. Microsoft Corp. has a version of Windows that works with chips made by Qualcomm Inc. PC makers, including
Microsoft itself, have made laptops based on that combination. Those products are praised for their battery life but haven’t grabbed significant market share. The Qualcomm processors are based on the Arm technology that Apple uses in its semiconductors.
While Intel’s grip on the market is largely intact and its earnings continue to grow, analysts have seen signs of slippage. Most of that stems from persistent delays in introducing new production techniques.
Once the leader in the crucial means of making processors faster and more efficient, Intel now trails Taiwan Semiconductor Manufacturing Co., the producer of all Apple-designed chips.
Those slip-ups may have accelerated Apple’s departure from Intel, said Matt Ramsay, an analyst at Cowen & Co.
Apple is a technology leader partly because of its control over both the software and hardware and its willingness to replace suppliers when it spots a vulnerability or an advantage elsewhere.
“Their reputation with suppliers is of being somewhat ruthless,” said Ramsay. “It looks like another consequence of Intel’s execution challenges.”