A Citigroup analyst's report added fuel to the speculation that Intel may become a foundry partner for Apple's iPhone and iPad chips.
Speculation
remains high about a possible Apple-Intel chip-making deal.
In a June 6
research note, Citigroup analyst Glen Yeung echoes what others have said, that
Intel might enter into a deal with Apple to make the chips that power such
devices as the iPhone and iPad tablet. Those chips-including the A4 and
A5-currently are made by Samsung based on designs by ARM Holdings. Yeung wrote
that Intel initially could build those same chips using the ARM designs, but
with the idea that eventually Apple would migrate over to Intel's low-power
x86-based chips within the next few years.
"We believe a
foundry relationship may be forming between Intel and Apple," Yeung wrote. "Our
discussions with the hardware supply chain tend to support this belief. ... We
suspect one such condition [under which Intel would perform the foundry work]
includes the potential for Apple to eventually convert from an ARM-based core
for handsets and tablets to x86."
Such a
scenario would be a huge win for Intel, which is putting a massive amount of
money and effort behind its aggressive push into the mobile-device space. Intel
continues to make billions of dollars from its core server and PC chips
businesses, but those are mature markets and
PC sales-particularly among consumers-are
showing signs of slowing.
By contrast,
the mobile-device space is booming. Market research firm Gartner is forecasting
that tablet sales will rise from almost 70 million this year to 294 million in
2015. In addition, market research firm In-Stat is predicting 850 million
smartphone sales in 2015. Right now, ARM designs are the dominant chip platform
in these markets.
Both
Intel and Advanced Micro Devices are working to
drive down the power consumption of their processors. Most recently, Intel in
May unveiled its
3D Tri-Gate transistor technology, a
three-dimensional structure that executives said will reduce the power
consumption of its chips by half while improving performance 37 percent over
current 32-nanometer processors. The Tri-Gate technology will begin appearing
in Intel's 22-nm "Ivy Bridge" chips, which will initially run in PCs and
servers beginning in 2012, and later in tablets and smartphones.
Citigroup's
Yeung said the Tri-Gate technology is a key attraction to Apple executives.
The
relationship between Apple and Intel has been a
source of heated speculation for months. Last month, Piper Jaffray analyst Gus
Richard said in a research note that Intel was "vying for Apple's foundry
business. It makes strategic sense for both companies. The combination of
Apple's growing demand and market share in smart phones and tablets gives Intel
a position in these markets and drives the logic volume Intel needs to stay
ahead in manufacturing."
Richard
reiterated that contention later in May, saying that Intel officials are
talking to OEMs-including Motorola-about creating foundry relationships, and
that other possible customers could be not only Apple, but also EMC, Cisco
Systems, Juniper Networks and Nokia.
"Intel has
clearly articulated they are interested in working with companies that want to
use x86 architecture," Richard wrote in a May 31 report. "The company is not
interested in enabling its fabless competitors or ARM Holdings."
According to
Citigroup's Yeung, Intel's manufacturing Apple chips based on ARM designs would
be a temporary situation.
"But as Intel
readies [its] 14nm [manufacturing process] (2013), potential for a shift
to x86 exists," he wrote. "At that stage, Intel would have appropriately
moved along the SoC [system-on-a-chip] learning curve."
A partnership
between Intel and Apple would be crucial to Intel's hopes of gaining share in
the mobile device space, according to Rob Enderle, principle analyst with The
Enderle Group. In an email to
eWEEK
in May, Enderle said such a move would boost Intel's fortunes.
"Rumor is
that Apple is looking at such a move, and if they get Apple, the earth
moves," Enderle wrote regarding the Tri-Gate announcement. "But if
they don't get a major brand and/or a very popular product, [the Tri-Gate
technology] still won't be enough."
Intel
executives have said making the move into the foundry business would be
difficult, given that it would take away fab capacity from its own
higher-margin processors.
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