Apple plans to replace Intel chips in Macs with its own: Bloomberg

The Mac plays a small part in Apple’s overall financial picture, with sales of 19.2 million units last year.
The Mac plays a small part in Apple’s overall financial picture, with sales of 19.2 million units last year.PHOTO: REUTERS

(REUTERS) - Apple Inc is planning to use its own chips in Mac computers beginning as early as 2020, replacing processors from Intel Corp, Bloomberg reported on Monday (April 2), citing people familiar with the matter.

Intel shares closed down 6.1 per cent at US$48.92 (S$64.21), while the tech-heavy Nasdaq ended down 2.7 percent.

The initiative, code-named Kalamata, is still in early developmental stages but is part of a bigger strategy to make Apple's family of devices work more similarly and seamlessly together, according to the report. 

Apple, which has used Intel chips in its computers since 2005, and the computer chipmaker both declined to comment.

The Mac plays a small part in Apple's overall financial picture, with sales of 19.2 million units last year and accounting for 11 percent of Apple's $229.2 billion in revenue for fiscal 2017.

But while the laptop and desktop computer market has been in a years-long slump amid the rise of smartphones and tablet computers, Mac sales rose 4 percent in 2017. The growth in Mac sales came even as PC sales declined slightly to 259.5 million units, the smallest drop since 2011, according to data from research firm IDC.

For its part, Intel still depends on PC sales for slightly more than half its revenue, though the company is aiming to make more of its money from growing markets like data centres.

Intel does not disclose how much of its revenue comes from Apple, but reported its PC segment overall generated US$34 billion in 2017, up 3.3 per cent from the year before on the strength of higher sales of notebooks and high-end gaming computers.

But for the past several months, Intel has been dealing with the reputation fallout from the Spectre and Meltdown chip design flaws, which affected nearly every modern computing device.

While Apple's reported move away from Intel would be a major shift for its Mac lineup, it follows years of increasing focus on designing its own chips for its devices. The company has been designing its own iPhone processors since the release of the iPhone 4 in 2010 and has steadily increased the amount of chip work it handles itself.

"We can push the envelope on innovation. We have better control over timing, over cost and over quality," Chief Financial Officer Luca Maestri said of Apple's chip efforts last year.

This year, Apple has spent hundreds of millions of dollars with suppliers of the 3-D sensor chips that power its facial recognition technology.

Analysts believe those efforts have helped Apple prevent its smartphone competitors from coming up with matching features until at least next year.