A very interesting little discussion by Jean Louis Gassee about who Apple might get to make their ARM chips for them.
But when it comes to chips, the two companies must pretend to be civil for the sake of the children: Samsung is the sole supplier of ARM-based processors for the iPhone.
Something has to give.
Since no one sees Samsung getting out of its booming smartphone business, the conclusion is that Apple will assume full custody, it will take its iDevices processor business elsewhere.
I said something about this a few weeks back. Given that Apple does seem to be unfriending Samsung then I'd be slightly worried if I were the guy who had just greenlighted Samsung's $4 billion expansion of that chip fab in Austin, TX. For that's what they make there, the ARM chips for Apple's mobile or iDevices.
But assuming that Apple does move on, who will they go to? There aren't that many chip fabs out there that could handle the business: and I think it entirely likely that Apple wouldn't want to split the order. One place that could possibly make them is Intel. But what Gassee points out is that from Intel's point of view this just doesn't work:
One way to visualize Intel’s money pump is to think of what the industry calls a Wafer Start. Here, “wafer” refers to the basic silicon “galette” that will go through the manufacturing steps and emerge with thousands of chips ready to be diced out. For Intel, profit comes from the difference between the cost of running a wafer through the $5B manufacturing unit (a “fab” in our argot) and the revenue that the marketplace will grant each chip.
Intel’s published prices range from a “low” $117 for a Core i3 processor to $999 for a top-of-the-line Core i7 device. Of course, these are the publicly advertised price tags, so we can assume that Acer, Lenovo, and HP pay less… but compare this to iSuppli’s estimate for the cost of the A6 processor: $17.50.
Even if more A6 chips could be produced per wafer — an unproven assumption — Intel’s revenue per A6 wafer start would be much lower than with their x86 microprocessors. In Intel’s perception of reality, this would destroy the business model.
The point really being that Intel doesn't have the cost structure to be able to work effectively simply as a chip fab. It has huge overheads out there in design and so on. These have to be paid for out of the revenues gained from actually baking the chips. But of course, if someone comes in with their own detailed design for a chip then they really don't want to pay Intel's design costs when they're not using Intel's designs. And Intel doesn't want anyone running wafers through their fab if they're not going to contribute to those design and other overhead costs.
Fun though the idea is of Apple using Intel to make their ARM chips it just doesn't look like it would be a good idea for either side.
