Apple reportedly plans to use its own chips
According to a Bloomberg report, Apple (AAPL) is working on a software platform as it prepares to separate itself from Intel (INTC), its Mac chip supplier, and use its own chips in its Mac computers. The iPhone maker is planning to replace Intel processors in the coming two years, beginning with laptops such as its 12-inch MacBook.
How much impact will it have on Intel?
Intel generates nearly 5% of its total revenues from Apple, according to Bloomberg estimates. Intel not only provides the processors for Mac computers but also supplies modem chips in some of Apple’s iPhones.
The news that Apple could be making its own chips was a significant blow to Intel. It reflected in INTC stock, which fell 9% in intraday trading on April 2, 2018, ending the day with a 6.4% fall.
However, Intel will not be entirely out of Apple’s portfolio. Intel will reportedly continue to supply chips to Apple until the iPhone maker develops its own chips that are as powerful as Intel’s and capable of meeting the demands of professional Mac users. And Intel isn’t totally dependent on Apple. Dell Technologies, HP (HPQ), Lenovo Group, and AsusTek Computer also use Intel chips.
According to an IDC (International Data Corporation) report on January 11, 2018, Apple is in the fourth position in the traditional PC (personal computer) shipment industry with a market share of 7.6% in 2017. HP tops the conventional PC market with a 22.7% share, followed by Lenovo and Dell (DVMT) with market shares of 21.1% and 16.1%, respectively.
So Intel may not have to worry about the potential loss of revenues from its chips if Apple makes its own chips for Mac computers. Intel has also been a long-time supplier to Alphabet’s (GOOGL) Waymo division. Intel has also partnered with BMW, Nissan, Volkswagen AG, and Ferrari to provide processing chips, sensor chips, and cloud software solutions.