Are Apple’s Chip Orders Years Away From Intel?
Intel (NASDAQ:INTC) is not likely to see any portion of Apple’s (NASDAQ:AAPL) mobile chip-making business for at least another two years. That assertion was made by Piper Jaffray analyst Gus Richard, who said the chipmaker would possibly not be seeing its products as iPhone or iPad components until 2015.
“We believe Apple could add roughly between $5 billion to $6 billion per year in revenue for Intel, but is unlikely to be a foundry customer this year or next,” Richard wrote in a research note, according to CNET.
Apple, whose self-designed mobile processors are currently manufactured by fierce smartphone rival Samsung (SSNLF.PK), is said to be looking for a new partner because of the complexity of this relationship. Intel is said to be one of the manufacturers in the running, with Taiwan Semiconductor Manufacturing Company (NYSE:TSM) also a strong bet.
TSMC is believed to have an edge over its rivals because it already has decades of experience in building chips designed by others. Intel, a PC processor veteran that has always designed its own chips, is a newbie when it comes to giving out its foundries. However, in what has been a big boost of confidence for it, large chip designer Altera (NASDAQ:ALTR) announced in late February that it was taking its orders to Intel…
According to Bloomberg, Intel has also landed a few smaller clients, such as designers Tabula and Achronix Semiconductor, and may be in the process of entering a deal with Cisco Systems (NASDAQ:CSCO) soon.
But the big prize —Apple — is a different ball game. The iPhone maker spent $3.9 billion last year on custom chips from Samsung Electronics, according to data from IC Insights. Bernstein Research said in a recent research note that the earnings upside for Intel from Apple’s business could be on the order of 30 cents or more per share. Piper Jaffray’s Richard thinks the wait is yet long. For Intel’s young contract manufacturing business, “Apple remains elusive,” he said.