On April 2, news spread quickly of the rumor that Apple plans to replace Intel processors with its own internally designed Arm-based processors for its Mac platform. While this development would be in line with overall industry trends and consistent with Apple’s pattern of increased integration and technology control, the news impacted financial markets and pushed Intel’s stock down by over 9% at one point during the day—it’s biggest drop in over two years.
Given that Apple accounted for around 4% of Intel revenue in 2017, the steep drop in Intel’s stock price likely reflects wider concerns about the broader implications of Apple’s possible switch. According to IDC, Mac computers won 8.2% market share in worldwide PC shipments in the fourth quarter of 2017, placing it fourth behind Lenovo, HP, and Dell Technologies. Apple’s Mac drove $6.9 billion in sales in the first quarter of 2018.
Why the Change?
Anybody following the trends in system architecture designs for Apple products knows that the day anybody earns a design win in an Apple product when they need to worry about losing that slot in a future design, due to the relentless pace of integration. Many companies have seen their fortunes rise and fall based on winning and losing positions in the lucrative, high-volume iPhone platform.
Apple is a leading example of a typical tech company’s desire to exercise an increasing degree of control over its platform by owning a larger share of the elements that contribute to its value proposition. With regard to the core processing function, Apple already makes its own A-series processors for the iPhone, the S-series for the Apple Watch, and the W-series for wireless headphones. In addition, its co-processors have already found their way into the Mac line.
Many electronics OEMs have been pursuing a path of acquiring key pieces of technology through acquisitions and licensing that allow them to integrate the critical pieces of their system design under one roof—or in one chip. Other major OEMs following this pattern of vertical integration and acquisition include companies such as Samsung and Huawei. The pendulum in the electronics hardware industry has clearly shifted away from the once primary emphasis of horizontal expertise to vertical integration and control.
From a big picture perspective, Intel’s win in the Mac platform has already surpassed the longevity of previous processor architectures. The Intel processor is the third processor family to drive the Mac platform. The summary of processors in Mac computers shows previous architectures have lasted 12 to 13 years:
- Motorola 68000 series processors from 1983 to 1996 (13 years)
- PowerPC processor family from 1994 to 2006 (12 years)
- Intel processors from 2006 to 2020(?) (14 years)
Certainly, there are many advocates for Apple to change to an Arm-based design that it controls. They point to the end of Moore’s Law and the decreasing differentiation that can be achieved by Intel through its leadership role in semiconductor manufacturing technology. They would like to see Apple untethered from the processor lifecycle controlled by Intel. In a world where interoperability between multiple platforms has become essential, the potential benefits of unifying the MacOS and iOS operating systems has been promoted by many users. This would be facilitated by basing the Mac on the same Arm-based architecture
But What About…?
Switching away from Intel processors is not without its challenges and dangers. For example, analysts point to the difference in processing power between Intel’s Core or Xeon processors and the efficiency-focused Arm processors. They also note the difficulties of unifying the MacOS and iOS operating systems in terms of meeting user expectations on both platforms.
However, one element not being considered regarding these challenges is the role 5G and the cloud will play in compute platforms of the future. The potential of ubiquitous, high-bandwidth capability will fundamentally change platform architectures of almost all electronics products beyond 2020. This likely means that much of the processing currently performed on individual computers will be offloaded to server farms powered by…Intel processors!