Will Apple Dump Intel?

Apple (NASDAQ:AAPL) has used Intel (NASDAQ:INTC) processors in its Mac personal computers since 2005, but in the coming years, that could change, and Intel could lose a major customer.

Apple is exploring the possibility of replacing the Intel processors with a version of the chip technology it now uses in the iPhone and iPad, people familiar with the company’s research told Bloomberg.

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Apple engineers believe the technology now used for its mobile devices will one day be powerful enough to run its desktops and laptops, according to sources. Though Apple unlikely to make the switch in the next few engineers, some engineers say a shift to its own designs is inevitable as the features of mobile devices and personal computers become more similar.

A switch would be a major blow to Intel, which has so far failed to gain a foothold in mobile gadgets as the PC market stagnates. Apple may also lead PC makers to follow suit.

“Apple is a trendsetter, and once they did their own chip many others may pursue a similar path,” said Sergis Mushell, an analyst at Gartner. “If mobility is more important than functionality, then we will have a completely different environment than we are dealing with today.”

The engineers working on this project within Apple envision various devices all using a common chip design, offering a seamless experience on laptops, phones, tablets, and televisions.

Intel’s loss could be ARM‘s (NASDAQ:ARMH) gain. Based in Cambridge, England, ARM Holdings Plc licenses chip designs and the technology behind them to phone-chip companies such as Qualcomm Inc. (NASDAQ:QCOM). Apple has in recent years acquired chip companies, added engineers, and created designs based on technology from ARM for the iPhone and iPad. Presumably, ARM’s designs would then be used in Apple’s desktops and laptops as well.

Chip research at Apple is now being led by Bob Mansfield, who Cook put in charge of a new group called Technologies during the management overhaul announced on October 29. According to a source, Mansfield is interested in melding iOS with the Mac to create a more uniform experience for all Apple devices. Craig Federighi, who was put in charge of development of all of Apple’s software, is also likely to push for this more integrated experience, the person said.

It would certainly help in Apple’s push to make products thinner and smaller without sacrificing performance. Apple’s technologists have grown increasingly concerned in recent years about Intel’s ability to create lower-power chips — the kind that the are required to run thinner, lighter products. Apple’s MacBook Air, for instance, has less room for the batteries needed to keep Intel’s powerful chips running all day because of its thin, teardrop shape.

If Apple can’t design ARM-based chips that are far more powerful than current models — powerful enough to run much more complex devices — then it will have to stay with Intel to satisfy consumers who need lots of computing performance. But Intel would be smart to hedge its bets by working on chips that would satisfy Apple’s needs. After all, if the Mac maker is successful in its aim, Intel could lose a major customer and source of revenue in an already shrinking market.

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