Apple has announced that it is bringing its 16-year partnership with Intel to a close and will start to fit its Mac computers with its own proprietary chip technology. The development was announced last night at Apple’s annual developers conference. The conference, designed to update the approximately 20 million developers working on native apps for Apple hardware, from iPhones to laptops, was held online for the first time.
Other big reveals over the course of the conference included new technology that has been integrated into iPhone and Apple Watch devices that will allow them to function as car keys, unlocking vehicles at the tap of a button. A coronavirus-themed update to the Apple Watch is a function that times if a wearer washes their hands for at least 20 seconds.
However, for investors in Apple stock keen for some insight into business critical developments, it was the move away from using Intel chips in favour of its own alternatives that captured the attention. The first Mac computer that will be powered by Apple chips will be released later this year.
Apple hasn’t gone as far as to develop its own processors from the ground up and they do rely on technology licensed from Arm, the UK-based and founded semiconductor company that was acquired by the Japanese conglomerate Softbank for $32 billion in 2016. Over the next few years, Apple will shift to fitting all of its Mac desktop and laptop models with its own Arm-based chips rather than Intel alternatives.
Apple CEO Tim Cook went as far as to label the development as an “historic day for the Mac”.
Apple has also had a long-term relationship with Arm before yesterday’s announcement, with the company’s chip technology already used in Apple’s iPhones and iPads. Its processors are considered to be more power-efficient than Intel’s, which is especially important for the battery life of a smartphone. However, when it comes to computers, the incentive appears to have been more about costs. Analysts estimate that producing its own chips based on licensed Arm technology will reduce its costs by 40% to 60% compared to buying Intel chips for its computers.
Investors appeared to treat the announcement as a positive development, with the Apple share price rising by 2.6% following the announcement. Having become the first ever trillion dollar company in history in 2017, Apple was last night valued at over $1.5 trillion. The majority of its income still comes from hardware, especially the iPhone with computers and iPads and Apple Watches a supporting cast.
However, with ‘peak iPhone’ believed to have already come and gone as consumers change their devices for the latest model less regularly than in the past, the company has been focused on developing increased revenue streams from services over the past few years. Apple Music and the App store have both increased their contributions to overall revenues and Apple TV+, a streaming service to rival Netflix and Amazon Prime, was launched in 2019.