Intel, Apple forging chip-baking deal?

The Register ^ | 7th March 2013 | By Rik Myslewski in San Francisco

[Ernest_at_the_Beach]

Analysis Rumors are again swirling that Apple and Intel are in discussions about Chipzilla baking the chips Cupertino uses to power its iDevices.

"A source close to one of the companies says Intel and Apple executives have discussed the issue in the past year but no agreement has been reached," Reuters reported on Thursday.

This isn't be the first such report. Similar rumors swirled in May 2011, when an analyst from Piper Jaffray said, "Based on a number of inputs, we believe Intel is also vying for Apple's foundry business."

Vying, possibly. Succeeding, not yet.

But things have changed since spring of 2011. For one, Intel inked a chip-baking deal with Altera late last month, after making similar deals with the smaller Tabula and Achronix.

More important, of course, is the fact that Intel hasn't yet found a way to fill it's revenue coffers with any significant amount of cash from the smartphone and tablet markets – their partnerships with ZTE , Huawei, and others notwithstanding. In addition, reports indicate that Intel's fabs aren't running at full capacity these days, due in no small part to the worldwide PC-sales slowdown.

And then there's the fact that there will soon be a new boss at Intel's Santa Clara, California, headquarters. Last November, the company's president and CEO Paul Otellini announced that he would be stepping down from his lofty perch this May. "After almost four decades with the company and eight years as CEO," he said at the time, "it's time to move on and transfer Intel's helm to a new generation of leadership."

And with new leadership may come new thinking. When Otellini announced his departure, Intel said that it would consider both "internal and external candidates" in its search for his replacement. Reuters, however, cites two sources who said that the company's board of directors has recently been focusing more on recruiting outside candidates than on elevating such internal talent as Dadi Perlmutter, head of the Intel Architecture Group and in charge of the company's bread and butter: PC, server, and mobile chip design and manufacturing.

From Apple's point of view, partnering with Intel as its chip manufacturer would have a dual advantage. Not only would it give them access to Intel's industry-leading Tri-Gate manufacturing process – and, for that matter, any further improvements in chip-baking technologies – but it would also free them from reliance on Samsung, which reportedly raised the price it charges Apple for fabbing the Cupertino-designed ARM and Imagination Technologies–based A6 processor than powers the iPhone 5 and fourth-generation iPad.

And then there is, of course, Apple's ongoing patent-infringement world war with Samsung, which undoubtedly causes more than a little friction between Cupertino and the Korean electronics giant. Although Apple CEO Tim Cook is too polite to say so in public, anything that could harm Samsung's bottom line – such as moving iDevice-processor manufacturing to Intel's fabs – would undoubtedly bring a smile to his face.

Manufacturing chips for Apple may indeed be a smart move for Intel in terms of revenue, but it would require new thinking – and, possibly, the aforementioned new leadership.

At the company's annual investors' meeting in May of 2011, Otellini answered a question about whether Intel would bake ARM-based chips in its fabs with a firm "The short answer is 'No'." A few days after making that pronouncement, however, Intel CFO Stacey Smith backed off a bit from that statement, saying instead that requests from companies to do so would lead to "in-depth discussion and analysis."

If Reuters' sources are correct, such discussion and analysis is now underway with Apple. ®

[reg45]

Apple could also buy AMD

[jonose]

AAPL should buy amd hpq and csc
then build a nice services arm out of eds and csc
spin off printers as separate company
sell off x86 pc and servers to lenovo
sell off legacy systems to oracle

The way I see it Tim is in a tight spot and quarters are
ticking away. He’ll need to make some dramatic moves to
keep his job.

[RockyTx]

for an IPhone, how much does the chipset cost?

keep in mind that in China,
you can buy a clone-iphone for 45 bucks.

[SunkenCiv]

Thanks Ernest.