Apple’s in a peculiar spot with its mobile processors: Even though Apple designs the chips for the iPhone, iPad, and iPod Touch, the company relies entirely on Samsung to build them. That’s not a relationship that can last for long, given the increasing tensions between the two companies.
So who else can build Apple’s mobile chips? According to RBC Capital analyst Doug Freedman, Apple is in talks with Intel to take over Samsung’s role, though it would mean significant changes for both companies.
As Fortune’s Philip Elmer-Dewitt reports, Freedman notes that for a potential deal to happen Intel may have to build ARM chips for the iPhone and iPod Touch. That would be a notable move for the chip maker, as Intel has so far stuck with only building chips sporting its own x86 architecture. In turn, Apple may have to agree to switch the iPad’s processor to x86 — which would be similar to the move away from PowerPC processors on Apple’s computers.
A year ago, it would be downright crazy to suggest Intel may build ARM chips. That would be equivalent to Intel admitting that it missed the boat on smartphone processors, and that its own attempts at mobile x86 chips weren’t worthwhile. But with Intel CEO Paul Otellini retiring next year, who was one of the main cheerleaders for Intel sticking with its own architecture, the door is open for the company to make some bold changes.
Freedman points out that Apple’s demand for mobile processors could surpass Samsung’s capabilities next year, and that Intel also has the “upper-hand” over competing chipmakers like Taiwan Semiconductor (TSMC) and GlobalFoundries. He estimates that Apple’s chip-making contract could be worth $2 billion next year.