Recent moves by Apple suggest that the phone and computer manufacturer wants to reduce its dependence on Intel by branching out into a new market: chip manufacturing.
The company has already signaled its intent to make chips for mobile devices, such as the iPhone, by its April acquisition of semiconductor company PA Semi. Now, the recent hire of former IBM executive Mark Papermaster — a key player in developing the PowerPC chips used in the previous generation of Macs — suggests that Apple has bigger plans, perhaps including manufacturing its own desktop and notebook chips. That broad move will likely come later in the future, as it’ll be a
substantial investment of both time and money. But such
a transition is inevitable since the company is already working on a
mobile processor, explained Rob Enderle, an industry analyst at Enderle
Group.
"Steve Jobs in particular is all about control, and in this situation he doesn’t have enough of it," said Enderle, who noted that Apple has $25 billion in the bank to make major changes.
The idea of
Apple taking control of processor production makes sense. Jobs is known for keeping tight control over the
company’s products; the corporation enjoys being the sole provider of
its premium-branded Macs, iPhones and iPods. However, it’s highly dependent on Intel for the CPUs used in its desktop and notebook computers. The silicon brain at the heart of the iPhone is made by ARM, another large semiconductor company.
Breaking dependence from Intel and ARM would be similar to what Apple did in
the past with PortalPlayer, a company that developed a chip and software used in the original iPod. Apple eventually developed its own iPod software and ditched PortalPlayer’s chip for Samsung’s by the time the fourth-generation iPod came out.
Though Apple tends to keep its mouth shut about future plans, Jobs’ desire to create his own iPhone chip is no secret. In a June interview with the New York Times, the CEO acknowledged
that Apple in April acquired PA Semi to produce a
mobile processor. Incidentally, Intel’s upcoming Moorestown platform is shaping up to be a must-have in future mobile devices — and a strong competitor to ARM — which is why Apple needs Papermaster’s help to move fast before Intel locks up the mobile chip market.
"The nature
here is that Apple has never liked to be at a disadvantage against a
single vendor," said Enderle. "Intel is a sole source … and that
would really irk Steve Jobs. He would want to fix that, and that would
motivate him to move away from Intel and create his own solution."
Recruited
by
Apple on Tuesday, Papermaster will be serving
as senior vice president of Devices Hardware Engineering, reporting directly to Steve Jobs.
IBM, too, thinks Apple has plans to make its own computer processors. And because of that, Big Blue doesn’t want Papermaster to leave: In fact, the company is suing Apple in
an effort to keep him.
ThinkPanmure analyst Vijay Rakesh said it would be challenging for Apple to manufacture computer chips, but he noted the company’s focus is hardware, and making its own chips is definitely a goal.
"They have all the technology in-house with software, but the actual chips are outsourced," Rakesh said. "I think they’ll probably do something about that."
So
there you have it: New chips in the future iPhones and Macs. What does that mean
to consumers? Lower prices? Chips more powerful than Intel’s?
Not
necessarily. The current ARM-equipped chips in today’s iPhones don’t
cost Apple much, so it’s unlikely we’d see a substantial reduction in
the handset’s costs. As for computers, Apple already stepped into the sub-$1,000 category when it slashed the price of its low-end MacBook. The next move would be a sub-$600 notebook, and cutting manufacturing costs of chips wouldn’t be enough to bring the price that low.
And since Apple chips would only exclusively
appear in Apple products, there’s no sure way to tell if Intel’s offerings
would have performed better.
"Steve Jobs could
probably get on stage with a pile of dog poop and people would jump up
and down about it," Enderle said. "The only thing the consumers are
going to say is, ‘Hey, this is a good phone that will do more stuff.’
…. [Apple's] pretty good at retaining and containing information.
Even if it’s not quite as good [as Intel], you won’t know."
Photo: TomStardust/Flickr
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