Camden

Cramer's Mad Money - Hey Apple: Chips Are Not a Commodity (4/30/09)

Re: "This will turn out to be a big deal."

I would add "... for Apple."

Of course how big a deal it becomes depends on Apple's ability to produce "more capable" chips in a timely, cost efficient manner.

Apple continues to up the ante for the competition. That bodes well for Apple and it's shareholders.


On May 01 09:46 AM Timeline Strategy Consulting wrote:

> Consider the context in which Apple operates. If they lack the capacity
> to design and fabricate their own chips, then they either: (1) subject
> themselves to whims of market pricing, long lead times, process runs
> of millions and millions of units; or (2) partner with, and pre-pay,
> a supplier who will dedicate capacity to Apple's specific needs.
>
>
> Either way, they are effectively held hostage by chipmaking capacity,
> which is theoretically able to be purchased by any company. In that
> sense it is a commodity.
>
> Apple is thinking many years ahead with this move. The basis of their
> strategy is that the separation between semiconductor and device
> manufacturers hurts product development cycles, as the device manufacturers
> are subject to the above dynamics. They will be able to design, produce,
> and test chips with extremely fast turnaround, and greatly speed
> the development cycle.
>
> This will turn out to be a big deal.