Bloomberg reports that Apple is going to oust Intel from Macs in the next few years.
The initiative, code named Kalamata, is still in the early developmental stages, but comes as part of a larger strategy to make all of Apple’s devices — including Macs, iPhones, and iPads — work more similarly and seamlessly together, said the people, who asked not to be identified discussing private information. The project, which executives have approved, will likely result in a multi-step transition.
The shift would be a 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, on the news. They were down 6.4 percent at $48.75 at 3:30 p.m. in New York.
Apple could still theoretically abandon or delay the switch. The company declined to comment. Intel said, “We don’t comment on speculation about our customers.”
For Apple, the change would be a defining moment. Intel chips remain some of the only major processor components designed by others inside Apple’s product portfolio. Currently, all iPhones, iPads, Apple Watches, and Apple TVs use main processors designed by Apple and based on technology from Arm Holdings Plc. Moving to its own chips inside Macs would let Apple release new models on its own timelines, instead of relying on Intel’s processor roadmap.
“We think that Apple is looking at ways to further integrate their hardware and software platforms, and they’ve clearly made some moves in this space, trying to integrate iOS and macOS,” said Shannon Cross, an analyst at Cross Research. “It makes sense that they’re going in this direction. If you look at incremental R&D spend, it’s gone into ways to try to vertically integrate their components so they can add more functionality for competitive differentiation.”
The shift would also allow Cupertino, California-based Apple to more quickly bring new features to all of its products and stand out from the competition. Using its own main chips would make Apple the only major PC maker to use its own processors. Dell Technologies Inc., HP Inc., Lenovo Group Ltd., and Asustek Computer Inc. use Intel chips.
By using its own chips, Apple would be able to more tightly integrate new hardware and software, potentially resulting in systems with better battery life — similar to iPads, which use Apple chips.
While the transition to Apple chips in hardware is planned to begin as early as 2020, the changes to the software side will begin even before that. Apple’s iPhones and iPads with custom chips use the iOS operating system, while Mac computers with Intel chips run on a different system called macOS. Apple has slowly been integrating user-facing features over the past several years, and more recently starting sharing lower-level features like a new file management system.
As part of the larger initiative to make Macs work more like iPhones, Apple is working on a new software platform, internally dubbed Marzipan, for release as early as this year that would allow users to run iPhone and iPad apps on Macs, Bloomberg News reported last year.
The company has also previously released Macs with ARM-based co-processors, which run an iOS-like operating system, for specific functions like security. The latest MacBook Pro and iMac Pro include the co-processors. Apple plans to add that chip to a new version of its Mac Pro, to be released by next year, and new Mac laptops this year, according to a person familiar with the matter.
Intel has dominated computing processors for more than a decade, taking market share from Advanced Micro Devices Inc., its only rival in the market. Intel also designs and builds modem chips for some iPhone models so that they can connect to cellular networks and make calls. While Apple is down the list of computer sellers by unit shipments, it’s third when measured by revenue last year, highlighting the premium status of its products.
Apple’s decision to switch away from Intel in PC’s wouldn’t have a major impact on the chipmaker’s earnings because sales to the iPhone maker only constitute a small amount of its total, said Kevin Cassidy, an analyst at Stifel Nicolaus & Co. A bigger concern would be if this represents part of a wider trend of big customers moving to designing their own components, he said.
In 2005, Apple announced a move to Intel chips in its Macs, an initiative that put former Intel Chief Executive Officer Paul Ottelini on stage with Apple co-founder Steve Jobs. It was a partnership that shook up the PC industry and saw Apple shift away from chips co-developed by IBM and Motorola.
Apple’s current chip designs made their name in thin and light mobile devices. That would indicate Apple will start the transition with laptops before moving the designs into more demanding desktop models. Apple has to walk the fine line of moving away from Intel chips without sacrificing the speed and capabilities of its Macs.
A decision to go with ARM technology in computers might lend it credibility where it has failed to gain a foothold so far. Qualcomm Inc., the biggest mobile phone chip provider, is working with PC makers to introduce new thin and light laptops based on its chips in another attempt to steal share from Intel. Microsoft Corp. is supporting that effort by providing a version of its Windows operating system for ARM technology-based chips.
Intel’s dominance of the market has been based on its ability to use leading manufacturing technology to produce processors that are more powerful than those of its competitors. Its would-be rivals haven’t yet produced designs that have displaced Intel’s products when it comes to crunching data quickly.
Apple’s custom processors have been recently manufactured principally by Taiwan Semiconductor Manufacturing Ltd. Its decision may signal confidence that TSMC and other suppliers such as Samsung Electronics Co. have closed the gap on Intel’s manufacturing lead and can produce processors that are just as powerful.
Intel is starving for a chunk of iPhone’s chip business.
A (very brief) report from Ian King and Mark Gurman at Bloomberg states that Apple will begin using its own chips in Macs, replacing processors from Intel, beginning in 2020. The report only cites “people familiar with the plans,” but Gurman has a very good track record for Apple rumors.
Of course, predicting the moves of any major tech company two years out is sketchy at best; even if you’re accurate at the time, plans can and do change.
The report is very brief and developing, but it says the initiative is code-named Kalamata and is part of a larger effort to get iOS devices and macOS devices to work together better. The plan has been approved by company executives, and the transition away from Intel chips will probably happen in multiple steps.
The impact on you at home: If this comes to pass, it’s an absolute bombshell. Apple is absolutely capable of producing some incredibly speedy chips—many have noted that the A11 in the iPhone 8 and iPhone X is already as fast as some Intel CPUs used in MacBooks. Creating chips for use in larger, more powerful Macs (iMacs and Mac Pros) is a bigger challenge, but one that Apple’s engineers seem up to.
This would herald a major shift on the software side, though. MacOS and the myriad of applications made for it are simply not compatible with the architecture of Apple’s current chips. Apple has three options: it can completely change macOS to only support its own ARM-compatible architecture (breaking compatibility with all current apps), it can prefer apps for its own architecture but emulate the x86 instruction set to run “legacy” applications (somewhat similar to the Qualcomm Snapdragon Windows 10 PCs), or it can produce its own x86-compatible chips (which seems unlikely if the goal is to make Macs and iPhones/iPads move closer together). The last two options may involve tricky licensing agreements that Intel may not want to agree to.
Apple has made major changes to its operating system in the past, requiring significant updates from developers, but the company is now much bigger with greater reach. Such a major shift in the way Macs operate and the way developers write applications for them will have to be managed very carefully.