Is Apple Considering These New Partners?
Apple (NASDAQ:AAPL) is definitely looking for a new semiconductor partner to replace Samsung (SSNLF.PK), and Intel (NASDAQ:INTC) may be one of the options the iPhone maker is considering, JPMorgan analyst Christopher Danely said in a research note.
“Given their deteriorating relationship, there has been much discussion surrounding the future of the Apple and Samsung foundry partnership,” Danely wrote, according to Barron’s. “Apple currently outsources 100 percent of its applications processor manufacturing to Samsung. We believe Apple will use Taiwan Semiconductor Manufacturing (NYSE:TSM) in the near term, rather than Intel. However, we believe Intel has a decent chance to land some of the business over the next few years.”
According to the analyst, winning even 50 percent of Apple’s foundry business would land Intel an additional $3.6 billion in incremental sales and 8 cents in earnings per share in 2017. However, such a partnership would likely not involve Intel’s Atom processor division, as Apple preferred its own custom approach with its own A series of mobile processors.
“Apple prefers to develop its own applications processor technology as it has done with prior generation iPhones and iPads,” he wrote. “In 2008 Apple acquired PA Semi to help the company develop a [system on chip]. Later, in 2011, Apple acquired fabless semiconductor company, Intrinsity, to gain access to a set of tools that enable higher clock speeds. Most recently, Apple announced the acquisition of AuthenTec, a manufacturer of fingerprint sensors, in July 2012”…
In addition, Intel may not be willing to dedicate a standalone fabrication facility to Apple, which TSMC would.
“We believe TSMC is committed to dedicating significant manufacturing space for Apple products,” the analyst added. “We do not believe Intel is prepared to construct and dedicate an entire wafer facility to Apple as we expect the company’s capital expenditure dollars will be used primarily for its higher margin microprocessor business.”
In the end, the decision will lie with the iPhone maker, though it has publicly continued to maintain that the Samsung relationship is fine.
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