How is Intel affected after losing Apple as its biggest client?

First, let’s get you up to speed with a brief timeline of Apple’s divorce with Intel.

In June 2020, Apple announced that it would ditch Intel’s technology that rejuvenated the Mac computer over the past 15 years. This split was aimed at tightening Apple’s control over its products, customers, and software developers. Apple was to replace Intel chips with custom ARM-based chips.

Later, in November, Apple introduced its first silicon in its move away from Intel processors, the M1 chip, which powered the latest MacBook Air, MacBook Pro, and Mac Mini at its release. 

Last month, rumours indicated that the first allotments of the M2 (or whatever Apple decides to call it) would be ready by this summer. On Tuesday, Bloomberg’s Apple correspondent Mark Gurman reported the company is setting up to unveil the refreshed MacBook Pros with a redesigned chassis early this summer. His sources told him that the company is readying the launch of 14 and 16-inch versions of the M2 MacBook Pro.

The new chips will have a slightly different architecture than the M1 variant. There are two versions of the M2 codenamed “Jade C-Chop” and “Jade C-Die.” An updated MacBook Air, “low-end” MacBook Pro, and an all-new MacBook Pro workstation with the next-gen silicon are slated for a reveal later this year. 

Apple plans to replace the last remaining Intel parts with an in-house version as early as 2022.

How Does This Hurt Intel’s Revenue?

Before doing my research, I believed Intel would lose a massive chunk of their revenue with my understanding of the industry if they lose Apple as their customer. However, it isn’t like that. Intel doesn’t disclose how much money it generates from Macs, but UBS analyst Timothy Arcuri estimates Apple only accounts for 2%-3% of Intel’s annual sales. According to Statista, Intel’s revenue for 2019 was around $72 billion, so Apple’s contribution would amount to $1.5 billion to $2.2 billion. 

Therefore, the Cupertino tech company doesn’t account for a huge slice of Intel’s business, but the loss could easily break Intel’s fragile streak of single-digit revenue growth.

Would This Move By Apple See Other PC Makers Following Its Lead?

Apple completely controls Mac’s hardware and operating system to transition away from Intel’s CPUs more easily than other PC makers. Newer versions of macOS will be optimized for ARM CPUs — which already power its iOS, watchOS, and tvOS devices.

Windows-based PC makers can’t make that transition easily because the main versions of Windows 10 are all designed for Intel’s x86 processors. Companies like Lenovo, HP, Samsung, and Microsoft have all released ARM-based Windows laptops, but they remain niche devices in a market dominated by x86 CPUs. Unlike Apple, most Windows PC makers don’t design their own chips. So we don’t see another Apple in the making shortly.

But Is Losing Apple’s Business A Blessing In Disguise For Intel?

Like the one Intel and Qualcomm once had with Apple, relationships are like marriages; they can be good or bad. In the good ones, you are working together to accomplish a common goal and fix your problems together with proper coordination. One partner believes the other works for them in the bad ones and that any problem is not their fault. They also tend to be abusive. 

In 2020, Apple forced Qualcomm to lower their chip pricing, allegedly creating a five-year plot to destroy their partner. At the same time, doing this passed confidential information to Intel from Qualcomm that effectively compromised Intel’s smartphone modem efforts, eventually forcing Intel out of that market. Apple subsequently bought much of Intel’s left at a discount, ensuring that Apple users will eventually get an inferior modem. 

Even with vendors like Intel, Apple has a history of requiring pricing that is unprofitable for vendors. Intel had to assemble a special team that focused only on Apple’s unique needs, and these folks had to be isolated from much of the rest of Intel. This likely made Apple the least profitable and maybe also unprofitable for Intel. Since Apple competed against other Intel customers, Intel effectively lost money to compete with itself. 

Apple’s partnerships with Cisco and IBM didn’t go well either.

What Does The Future Hold For Intel?

What’s worse for Intel is that Dr Lisa Su is in charge of their rivals Advanced Micro Devices (AMD). Su has brought about an incredible resurgence of AMD since she took over in 2014.

AMD has been gaining share from Intel in the processors market continuously. AMD’s market share gained from 18% in 2016 to 23% in 2018, 5% growth in a market that Intel dominated within just two years.

In fact, as of late 2019, AMD’s market share stands at over 32%. That is an almost 100% increase from 3 years ago and a 1/3rd of the entire market. AMD’s remarkable products have helped it make a dent in the market share from Intel and Nvidia and have helped drive revenue growth of around 50%.

However, history tells us that Intel can come back and take over its lost market share. But can Intel repeat history without Apple? Only time will tell.

In conclusion, Intel and the industry are best served by Apple going its own way, allowing Intel to better focus on the rest of its OEMs and increase the market’s health. 

On the other hand, Apple may regret this move because Intel was neutral in the Mac vs PC battle. As Intel is not a partner anymore, that’s about to change, and Apple may not have factored in the resulting unanticipated collateral damage as Intel pivots from partner to competitor.