Apple Plans To Use Its Own Chips In Macs From 2020, Dropping Intel Whose Shares Fell Yesterday

In 2005, Apple’s CEO Steve Jobs made the public aware of its intention to transit. The transition was from the use of PowerPC microprocessors supplied by Freescale (formerly Motorola) and IBM in its Macintosh computers, to processors designed and manufactured by Intel. The announcement was made at the Worldwide Developers Conference (WWDC).

Moving forward, Apple is reportedly planning to drop Intel chips from its Mac computers as early as 2020, replacing them with processors designed in-house, the goal? To make Mac Computers in the same way the company manufactures iPhones and iPads according to a new report from Bloomberg.

The switch would be a big 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.

Intel shares dropped as much as 9.2 percent, the biggest intraday drop in more than two years, following the recent news.  There are many different types of chips and processors that go into Apple’s products, both from Intel and competitors such as Qualcomm, Broadcom and Arm. But Apple has increasingly looked to bring design of the most important chips — for things like artificial intelligence and augmented reality — in-house, with chips for Mac, Watch, AirPods and Beats.

Johny Srouji, Apple’s senior vice president of hardware technologies, said last year that Apple was eyeing chip-based acquisitions in Israel, while chief financial officer Luca Maestri  said that a huge chunk of Apple’s R&D budget goes to chips.

“Today, we do much more in-house development of some fundamental technologies than we used to do a few years ago, when we did more of that in the supplier base — the work we do around processors or sensors,” Maestri said at the Goldman Sachs Technology and Internet Conference in San Francisco last year. “It’s very important for us because we can push the envelope on innovation, we can better control timing, cost, and quality. We look at that as a great strategic investment”

Intel has many other lines of business, but for years now it’s known for its “Intel inside” computer stickers which makes Apple is large and influential customer. Most Apple products have the Intel inside which are: Mac Pro and iMac Pro use the Intel Xeon, the iMac has Intel Core i5 and i7 processors, and MacBooks use versions of the Intel Core i5, Intel Core m3 and Intel Core i7.