Giant chip Intel (NASDAQ: INTC) reported second-quarter results last week, and the launch included an announcement that the company’s 7-nanometer processors would be delayed by approximately six months. Those chips were initially released in late 2021, so the delay will delay that debut until 2022. At least Intel is finally starting to increase production by 10 nanometers, which has also been delayed for years.
Continued stumbling with transition to new generations of manufacturing technology fully validates Apple‘s (NASDAQ: AAPL) decision to dispose of the company in favor of its own silicon.
Image source: Apple.
Trusting Intel has been a responsibility in more ways than one
After many years of speculation, Apple announced last month that it would spend the next two years making the transition from Macs to its proprietary chips. The first Macs of this type will ship later this year, but it will also take time for developers to modernize their software to take advantage of a new chip architecture.
Beyond an estimated $ 2 billion in cost savings that the company could realize, the strategic implications around product lead times are far most important to the $ 25 billion Mac segment. You may recall that in early 2019 Apple blamed Intel for disappointing Mac sales.
“For our overall Mac business, we faced some processor constraints in the March quarter, which led to a 5% decrease in revenue compared to last year,” CEO Tim Cook said last year. “But we believe that our Mac revenue would have increased compared to last year without those restrictions and we do not believe that this challenge will have a significant impact on our third quarter results.”
Trusting Intel too much has become a responsibility in more ways than one. Apple was confident in Intel’s ability to launch a 5G modem that could be competitive with Qualcomm (NASDAQ: QCOM). Given the Mac maker’s epic two-year legal war with the mobile chip giant, it’s clear that Apple completely disdains doing business with Qualcomm. But Intel’s failure to develop a viable 5G modem for iPhones forced Apple to settle for Qualcomm, and Apple subsequently bought the remnants of Intel’s modem business to take development into its own hands.
Taking the initiative
At the same time, Apple has progressively brought its chip-making prowess to levels of scale and technological ambition unprecedented in recent years, designing everything from the main application processor to wireless chips and security chips that house confidential biometric data. , among others.
However, Apple does not manufacture these chips itself, but it touches Taiwan Semiconductor (NYSE: TSM) to make the silicon that Apple designs. TSMC is currently a generation ahead of Intel in terms of comparable manufacturing technologies, and that leadership is likely to remain intact for the foreseeable future.
Apple may ship the first laptops with 5nm process technology.
– Ben Bajarin (@BenBajarin) July 24, 2020
That’s not to say TSMC is immune to heists: The leading chip foundry company recently said it would delay test production of its 3-nanometer process due to the COVID-19 pandemic. But TSMC is already ahead and is prioritizing its 5 nanometer and 7 nanometer processes. Relative to Intel, TSMC has run much more consistently overall, and Apple wants more control over its roadmap.
