When Apple (NASDAQ:AAPL) announced today that its 11 inch and 13 inch MacBook Air products, based on Intel's (NASDAQ:INTC) 4th generation Core processor, were ready to ship immediately, it signaled to me that the relationship between Apple and Intel, at least in the Mac arena, is tightening and not, as some would speculate, weakening. While the latest crop of 4th gen Core based Ultrabooks will not hit the shelves until Q3 (possibly at the Windows 8.1 launch), Apple's MacBook Air with said processor and all of the battery-life enhancing goodies is here today.
Remember That ARM Rumor?
Back in November/December, there was a very concentrated anti-Intel bias in the air. Bloomberg was spreading rumors that Apple would be ditching Intel's "Core" processors for an internally designed, ARM (NASDAQ:ARMH) compatible processor, likely very similar to the one found in the iPad. I was one of the first on the scene, reassuring people that this was not likely to happen and that, if anything, the reverse (iOS devices moving to Intel) was the more likely outcome.
See, the problem with technology stocks -- and in particular, very hard to understand sectors such as semiconductors -- it's easy to scare the masses into believing whatever "hot" rumor that somebody wants to spread to generate trading action. At the time, Intel was battered and bruised following the slump in PC sales and the Q3 guide down, so it was an easy target for short sellers. Further, with ARM on the upswing at the same time (fueled by the noise it was making about 64 bit chips for servers), it made sense for the press/rumor mill to start claiming that Apple would be moving to ARM in order to add more fuel to the uptrend fire that kept the flame burning in ARM's shares.
Anyway, with the next generation MacBook Air powered by Intel's 4th generation Core, and with Apple now promising all-day battery life within a very slim form factor all with substantially enhanced graphics, it is clear that Intel is building exactly the chips that Apple wants/needs for its MacBook line of products. This means that Apple -- which had very little choice in applications processors for iOS devices back in 2007/2008 -- sees no need to try to take on the Herculean effort of developing its own high performance/low power chip for ultrathin laptops. While designing a custom low power/low performance ARM SoC for a phone is one thing, the level of complexity of a Haswell ULT-like chip is substantially greater. Also, in the higher performance space, Intel's process lead is gigantic, so Apple would be a node behind all of the me-too Ultrabook vendors that use Intel's chips -- a losing proposition in power optimized devices.
Intel Inside Apple's Most Innovative Products
Apple's most innovative product at WWDC (in my view), the new Mac Pro, is powered by Intel's latest-and-greatest (yet to be announced) "Ivy Bridge" based Xeon processors, and will support up to 12 cores. While I think that the new form factor is very interesting, I am also very pleased that Apple isn't letting up on the focus on performance, as the machine sports two top-of-the-line AMD (NYSE:AMD) FirePro cards in addition to the top-of-the-line Xeon part. The Mac Pro was long overdue for an upgrade, and this certainly brings the machine up to speed.
Isn't it funny, though, that Apple's most innovative products at WWDC weren't ARM based? Sure, iOS got an upgrade, but that's a pure software update. iOS finally brings us multitasking (Android has supported this forever) and the UI becomes prettier/sleeker. We did not get an announcement of a 20nm Apple A7, nor did we see Apple talk up an A6X based MacBook Air. Apple isn't stupid, and the company knows firsthand how painful it can be on the market segment share side of things to lag in performance and performance/watt, and in anything requiring serious horsepower -- from a MacBook Air to a Mac Pro -- Intel is the clear leader.
As I look at articles all over the web, I see authors tripping over themselves now to hype up Intel, when just six months ago these same individuals were claiming that ARM would take over the world and Intel's fabs would fill up with cobwebs. Well, the storm of nonsense is over, and it seems that all is once again right in the world. Apple's "A-series" chips were developed simply because no other vendor had a chip worthy of Apple's iOS products, but at the higher end, Intel is untouchable, and if Intel can produce a MacBook Air class chip with massive CPU and GPU performance and still allow for 10 hours of battery life, then a high end iPad with a "Core" processor inside is just a "tick" away.
Disclosure: I am long INTC, AMD, and I am short ARMH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.