Apple's M1 processor highlights Intel's chip challenges
Apple's custom-built M1 processor and the new MacBook Airs, MacBook Pros and Mac Minis that use it are a problem for Intel. The divorce proceedings will last about two years as the prestigious customer gradually ejects Intel's chips from its personal computers.
But Intel isn't doomed.
The Santa Clara, California, company has some advantages and options in the PC market that insulate it from Apple's threat. Other PC makers aren't going to have as easy a time as Apple in moving past Intel. Intel is still the leader in higher-end chips more powerful than the M1. And it's got enough money on hand -- $18.25 billion in cash, equivalents and investments -- to let it spend its way to a better situation.
"There isn't much near-term threat to Intel's PC business beyond losing one sizable customer," said Linley Group analyst Linley Gwennap. That doesn't mean it's going to be easy for Intel, though.
Giving Apple grounds for divorce is the latest of the chipmaker's whiffs. Earlier achievements, like charting decades of steady chip industry progress with Moore's Law, pioneering PC technology standards and powering Google's data centers, have been overshadowed by newer flubs. That includes losing its manufacturing lead and failing to tap into the smartphone market. Intel ultimately sold its cellular chip business to Apple for $1 billion.
Though Macs account for only about 8.5% of the PC market, according to IDC, Apple remains one of the biggest and most influential tech companies. Its MacBook Air models led the trend to slim but useful laptops, its MacBook Pro models remain popular with programmers and the creative set, and Apple profits from selling premium machines costing hundreds of dollars more than most Windows PCs.
Losing Apple's business will sting. New Street Research analyst Pierre Ferragu estimated in a Wednesday report that 4% to 5% of Intel's revenue comes from Apple. But it's just one of the concerns Intel will need to address.
Intel said it's "relentlessly" focused on building leading chips. "We welcome competition because it makes us better," Intel said in a statement. "We believe that there is a lot of innovation that only Intel can do," including supplying chips that span the full price range of PCs and that can run older software still common in businesses.
It's also built its first samples of the 2021 Alder Lake PC chips and expects improvements in 2022 and beyond. "We're increasingly confident in the leadership our 2023 products will deliver," the company said.