Two Apple (NASDAQ:AAPL) rumors are converging this week, and gaining credibility as they do so. The first is that AAPL is planning to move its Mac computers away from processors made by Intel (NASDAQ:INTC), to custom ARM-based chips. The second is that the company plans to combine Mac and iOS apps that work across the company’s PCs and mobile devices. The latest confirmation on Apple’s big plan comes courtesy of Intel officials who have reportedly confirmed that they expect Apple to begin offering an ARM-based Mac as soon as next year.
This spells bad news for Intel, but is likely to provide a big boost to Apple — on the Mac side of its business as well as with iPhones and iPads.
Report: Intel Officials Confirm Suspicions Apple Moving to ARM-Based Mac
Yesterday evening, Axios reported that un-named Intel officials confirmed they expect Apple to ditch Intel processors in its Macs and switch to its own ARM-processor designs “as soon as next year.”
We first reported on this possibility last fall, but this latest report is the first time Intel representatives have commented on the move (albeit off the record), lending more credibility to the rumor.
The Advantage(s) for Apple
For Apple, there are multiple advantages to transitioning to an ARM-based Mac.
The first is the ability for developers to create apps that could be used across all of the company’s computing and mobile devices starting in 2021. This plan — code-named Marzipan — was detailed by Bloomberg earlier this week. With an app that will work on a Mac, iPhone and iPad without having to be rewritten for each platform, Apple makes releasing software for its unified platform very attractive.
Windows PCs have always had a big advantage over Macs because of limited software availability for MacOS, but consider how successful Apple App Store for iOS has been. Marzipan could upend the decades-long application advantage of Windows, while also making the iPad and iPhone more attractive to buyers.
But it requires an ARM-based Mac to work, and if AAPL starts releasing these in 2020, then the 2021 timeline for Marzipan makes sense.
The second big advantage is performance.
With its A-series mobile processors for the iPhone and iPad, AAPL has proven that when it designs both the silicon and the hardware, it delivers a combination that beats the competition.
The iPhone regularly trounces the top Android smartphones in benchmark performance tests, despite the fact that Apple typically equips its smartphones with half the RAM the competition does. That gives AAPL an edge while reducing the component cost of iPhones and iPads because the company has to buy less RAM.
Apple is also able to integrate features that the competition lacks because off-the-shelf processors aren’t optimized to support them. An ARM-based Mac could potentially outperform a similarly-priced Windows PC equipped with an Intel processor.
Other reasons? Delays in new Intel processor releases have frequently been blamed for holding up new Mac models. That would be a thing of the past with ARM-based Macs. It’s also expected that by designing its own chips, Apple would save money compared to buying them from Intel.
ARM-Based Mac is Bad News for Intel
According to Bloomberg, Apple’s Mac business makes up roughly 5% of Intel’s revenue. Losing that wouldn’t be catastrophic, but it would hurt. And if Apple’s move resulted in more consumers and businesses choosing a Mac over a Windows PC, that would eat away even more at Intel’s bottom line. When the rumors of an ARM-based Mac first surfaced last year, Intel stock got hammered. That reaction hasn’t repeated this time around, but it goes without saying that Intel should be concerned.
Some Chaos, But a Stronger Apple Afterward
Apple has transitioned its Macs to new processors several times in the past, most recently from PowerPC to Intel in 2006. During the transition, things can be a bit chaotic for Apple engineers, app developers and consumers.
Any pain is expected to be short term, though. And once the move to an ARM-based Mac is made, there is big upside for three of the company’s most important revenue-generating divisions: Mac, iPad and iPhone. And that also means upside for Apple stock.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.