Will Apple Inc. (AAPL) Abandon Intel Corporation (INTC) And Pick ARM For Its Macs?

  • Apple would save a lot of cash if it started equipping its Macs with ARM chips.
  • But such a switch could also lead to a lot of software incompatibilities.
  • Apple is probably better off by gradually releasing ARM-based laptops, rather than doing it in one go.

Apple Inc. (NASDAQ:AAPL) ditched IBM’s PowerPC and has been equipping its Macs with Intel’s x86 chips for more than a decade now. But now that the iPhone-maker’s in-house line of ARM chips has matured, there have recently been several rigorous speculative discussions over whether or not Apple would ditch Intel in favor of its own ARM chips for the Mac line-up going forward. In fact, one recent report claimed that Apple added support for ARM chips in its macOS code. But does it make sense for Apple to abandon Intel at this stage of the game? Let’s take an objective look at the matter to have a better understanding.

Also read: This One Big Mistake Could Hurt Apple Inc.

Reasons for Switching

  • Let me start by saying that Intel has been the clear leader in the x86 desktop segment for about a decade now; it operated with a whopping 87.7% market share in the fourth quarter of 2015. Now the thing is, with such a dominant market position, and no clear competitor to rival its hegemony, Intel has been able to charge a market premium from OEMs and end consumers. This usually bumps up the costs for OEMs (such as Apple) and forces them to contemplate about switching to other architectures. To put things in perspective, Intel chips reportedly cost about 4-5 times more than similar ARM-based offerings. So Apple would be saving a huge chunk of cash by moving away from Intel in favor of ARM. After all, Apple sold about 20 million Macs last year and even a $100 cost reduction per unit would amount to sizable savings.
  • It’s also worth noting that ARM chips have lacked Intel in terms of raw performance over the past several years since the latter's offerings have mostly been under-clocked for low-voltage and power-saving environments. But the recently announced A10 Fusion chip trumps all of Apple’s past chips in terms of performance. In fact, I was going through Geekbench scores of A10 Fusion chip and was surprised to see that they performed better than i5 ultra low voltage chips found in the past few iterations of MacBook Airs. I attached the comparative performance chart below for your reference. So if the performance is comparable to Intel chips, why pay 4-5 times more?


  • Also, Apple has had to stick to Intel’s release cycles in the past to release the new iterations of its Macs. But by moving away from Intel, and designing its own ARM chips, Apple would be free to release new products, in accordance with its ARM-based chip development schedules. It won’t have to wait for a quarter or two, just because Intel’s next-generation chips got delayed due to yield issues. So Apple would be able to release its Macs in a timely, and an aggressive manner.
  • And lastly, we all know that Apple already designs its own ARM chips for mobile which are later manufactured by third-party fabs. Once Apple starts designing its own ARM chips for Macs as well, I believe that significant cost savings would start to roll in. It would have one common design team developing a unified chip architecture for its mobile as well as desktop lines, so that would generate more returns out of the same (or marginally higher) employment costs. Also, Apple would be in a better position to squeeze its foundry partners for discounts given the higher order volume. So, I’m of the opinion that moving to ARM would improve Apple’s economies of scale.

Also read: Apple Inc. (AAPL) Stock Still Has A Huge Upside

But...Now the bad part

But abandoning Intel in favor of in-house ARM chips won’t be so easy.

  • First of all, moving away from Intel could be a challenge. Currently most of the consumer grade desktop applications are developed for the x86 platform. If Apple decides to suddenly stop using x86-based Intel chips, and equips only ARM-based chips in the next iterations of MacBooks, MacBook Airs and MacBook Pros, there’s a real possibility that several thousand apps wouldn’t work at all. Emulators would be needed to run x86 applications on ARM processors which would most certainly have a performance drawdown on ARM chips, resulting in device slowdowns. 
  • Secondly, ARM offerings may have beaten Intel in the mobile space, but it won’t be easy to replicate history in the desktop space. Back then, when ARM was growing, Intel was not there to compete in the space for the first few years, and ARM had a clear path to expand. But the situation is different in the desktop space; ARM-based chips would have to dislodge an industry leader to grab a foothold. It won’t be easy and could lead to critical incompatibilities of applications if you forcefully replace an x86 chip with an ARM chip.
  • Microsoft tried to do something similar with its Surface RT laptop-tablet. It took its Surface Pro laptop and housed an ARM-chip. But the project failed miserably and Surface RT sales failed to take off. The point that I’m trying to make here is that Apple Macs could face a similar fate if the execution isn’t proper or unplanned glitches occur over time. There’s also a possibility that Apple might not want venture into ARM-powered Macs at all, after watching Microsoft fail. 
  • Lastly, it’s worth noting that Apple makes Reduced Instruction Set Computer (RISC) -based ARM chips but Intel’s x86 chips are far superior in this regard since they are Complex Instruction Set Computers (CISC). I wouldn’t go into the technical details as they are already explained in depth here. But the crux of it all is that CISC chips offer far more features than their RISC counterparts. RISC architecture has a limited number of instructions and it generally requires running of several instructions in sequence to perform complex tasks, that would otherwise require just one instruction in CISC. So Apple would be taking processing capabilities away from hardware and software engineers (and maybe even end users) by switching to ARM. These guys may switch to x86 machines due to this, leading to a loss of market share for Apple.

Also read: Is Intel Corporation (INTC) Stock A Good Buy?

Putting it all together

Apple would be vastly improving its profitability on the Mac line-up if it moved to manufacture its own desktop-grade ARM chips. But it would also be a disastrous development if the entire Mac line-up fails in terms of sales, due to software and hardware incompatibilities with legacy applications.

I believe that rather than moving the entire line of Macs from Intel to ARM in one go, a better move would be to introduce a separate line of Macs powered by ARM chips. Apple can let this line develop for a few years, and when the platform has matured and grown competent enough to compete fiercely with x86 offerings, the Cupertino-based giant can switch the entire Mac line-up to ARM chips.

Also see: Amigobulls latest top technology stock picks.

Piyush Arora Piyush Arora   on Amigobulls :
Author's Disclosures & Disclaimers:
  • I do not hold any positions in the stocks mentioned in this post and don't intend to initiate a position in the next 72 hours
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
Amigobulls Disclosures & Disclaimers:

This post has been submitted by an independent external contributor. This author may or may not hold any positions in the stocks discussed. Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. Amigobulls has not verified the author’s positions in the stocks discussed, and does not provide any guarantees in this regard. The author may be paid by Amigobulls for this contribution, under the paid contributors program. However, Amigobulls does not guarantee the authenticity or accuracy of the information provided by the author in this post.

The author may not be a qualified investment advisor. The opinions stated in the post should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.

Amigobulls does not have any business relationship with any of the companies covered in this post. This post represents the views of the author/contributor and may not reflect the views of Amigobulls.

show more

Comments on this article and AAPL stock

Being anchored to INTC's silicon release cycle is one thing, but assuming that AAPL doing it's own silicon design makes it suddenly 'fixed' is naively fanciful at best.

Software incompatibilities? This is something I would suppose already 'done' within AAPL -- since they had a port of MacOS to x86 way before they announced the switch (watch the launch of x86 Macs). AAPL own many of the key applications and most others have very little chip-specific code. Translation layers/emulators are the norm during transition of market share for every domain from mobile phones (Intel with Houdini ARM-->x86) to enterprise servers (HP with Aries PARISC --> IA64).

CISC vs RISC is an abominably poor argument based on very little relevant metrics. The innards of contemporary INTC CPU engines is arguably RISC (very deep pipeline, simple microinstructions). The x86 instruction set (the 'outer layer') might be CISC, but that hasn't been natively executed for many years; most critical codes for media/crypto and so on use custom instructions dedicated to this on both architectures so the argument is incorrect (irrelevant comparison and wrong in most cases since CPU ISA evolution has made them broadly comparable).

The hypothesis that AAPL could design chips with the same core from music players (iPod Touch) through to hard-grunt machines (Mac Pro): INTC haven't succeeded in this plan (for whatever reasons) with x86 phones/low-end tablets through to the Xeon server class chips. Perhaps there's a real possibility to go from the bottom up (scale up from the low-power phones/tablets) versus the top down (x86 Xeon/Atom down). Has anyone managed this? Xeon (INTC/x86) scales with more than a dozen physical cores per chip. AAPL might need to double-down on that or more to provide the grunt for the compelling step-up. Who knows?

As for switching big-bang versus a blended roadmap. AAPL have precedent with this (x86 transition delayed on the Mac Pro line) as have others. This is the norm.

I think that switching away from high end INTC CPUs is an option that more than just AAPL would be continuously evaluating. AAPL have a modus operandi of owning the end-to-end production. This would be a simple continuation of that practice.
4 reply
Do share this awesome post