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Apple-Made Computer Chips Coming to Mac, in Split From Intel

“The Mac is transitioning to our own Apple silicon,” Tim Cook said.

Apple-Made Computer Chips Coming to Mac, in Split From Intel
Tim Cook, chief executive officer of Apple Inc., speaks during the Apple Worldwide Developers Conference. (Photographer: Andrew Harrer/Bloomberg)

Apple Inc. said it plans to sell Mac computers using processors designed in-house, signaling an end to its 15-year alliance with Intel Corp.

The first Macs with the Apple-designed chips will debut by the end of the year, Tim Cook, the chief executive officer, said Monday at the company’s virtual conference for software makers. Apple is also working on models with Intel processors, Cook said.

“When we make bold changes, it’s for one simple yet powerful reason: so we can make much better products,” Cook said. “The Mac is transitioning to our own Apple silicon.”

The new chips will enable Apple to build computers with improved security and battery life, said Johny Srouji, Apple’s silicon chief. Developers will need to compile versions of their apps compatible with the new products for the software to run smoothly. However, Apple will provide a fall-back to make old apps run on the new system. Microsoft Corp. and Adobe Inc. have already begun updating Office and Photoshop, Apple said.

Apple introduced an array of software enhancements to its products at the event Monday. It will make the most drastic changes to the iPhone home screen since the product’s release in 2007, bringing the software more in line with Google’s Android. Users will be able to place widgets that sit between the typical grid of apps, can be set to varying sizes and present information, such as the weather or a calendar, that updates throughout the day. The Apple Watch will get sleep tracking and hand-washing detection tools.

The changes to the Mac are the most significant, though. Apple will release a major new version of the Mac operating system, called Big Sur, with support for the new chips. The design looks similar to the iPhone and iPad, with curved app icons, translucency, notification bubbles and the new widgets feature from iOS 14. The Messages and Maps apps will gain many of the features available in their mobile counterparts, and the Safari web browser will get a translation tool, changes to tabbed browsing and a customizable home page. Executives made a point of demonstrating how smoothly these apps run on Apple-designed chips.

The partnership between Apple and Intel was formed in 2005, when Steve Jobs outlined a move away from PowerPC processors onstage at the same Apple event series for developers. Intel helped Apple catch up to Windows computers, some of which were more powerful at the time. In tandem, though, Apple was working on more energy-efficient chips for mobile devices based on Arm Ltd. designs and continues to use those to power the iPhone and iPad.

In recent years, the speed and power efficiency of Apple’s mobile chips have rapidly increased, while the pace of improvement to Intel’s parts has slowed. This irked Apple executives, who pushed the company’s silicon unit to develop more powerful processors fit for the Mac, people familiar with the matter have said.

The split from Intel has been a long time in the making. As far back as 2012, Apple was exploring a switch to its own chips, Bloomberg reported at the time. In 2018, Bloomberg reported that Apple would formally begin the transition away from Intel in 2020.

In addition to ensuring legacy software runs well on the new Macs, a challenge for Apple will be to make processors speedy enough to replace Intel chips in its “pro” line of computers. Apple didn’t say Monday which models will get the new chips. Intel shares were about flat in intraday trading, while Apple’s stock was up 2% Monday, surpassing market-wide gains.

Intel said in an emailed statement that it will continue to support Apple as a customer. Intel also boasted that its chips are the most advanced and offer the most open platform for software developers.

The Mac is no longer the key revenue driver for Apple that it once was, but it safely sells about 20 million unit a year, delivering about $25 billion in revenue. The computers are also key for Apple to retain its professional market, which helps spur purchases of more popular devices like iPhones, AirPods and Apple Watches.

For Intel, a break with Apple is more of a symbolic blow than a financial one. The entire Mac laptop lineup represents less than 5% of Intel’s annual revenue, according to an estimate by Stacy Rasgon, an analyst at Sanford C. Bernstein. The bigger concern is that Apple could embolden other computer makers to make similar moves, he said. “Now you have an actual PC that can run on something that’s not Intel.”

Intel, the world’s largest chipmaker, has shrugged off attempts to unseat its dominance of personal computing for decades. Its only direct rival today is Advanced Micro Devices Inc., which has produced newer processors that have begun to take share over the last two years. But AMD’s revenue is still less than 10% of that of Intel.

Other efforts to break Intel’s lucrative grip on computer processors haven’t made much of a dent. Microsoft Corp. has a version of Windows that works with chips made by Qualcomm Inc. PC makers, including Microsoft itself, have made laptops based on that combination. Those products are praised for their battery life but haven’t grabbed significant market share. The Qualcomm processors are based on the Arm technology that Apple uses in its semiconductors.

While Intel’s grip on the market is largely intact and its earnings continue to grow, analysts have seen signs of slippagge. Most of that stems from persistent delays in introducing new production techniques. Once the leader in the crucial means of making processors faster and more efficient, Intel now trails Taiwan Semiconductor Manufacturing Co., the producer of all Apple-designed chips.

Those slip-ups may have accelerated Apple’s departure from Intel, said Matt Ramsay, an analyst at Cowen & Co. Apple is a technology leader partly because of its control over both the software and hardware and its willingness to replace suppliers when it spots a vulnerability or an advantage elsewhere. “Their reputation with suppliers is of being somewhat ruthless,” said Ramsay. “It looks like another consequence of Intel’s execution challenges.”

©2020 Bloomberg L.P.