MKM Partners analyst Daniel Berenbaum took a look at the situation this morning and concluded that Intel could take on the new role as a foundry - Apple uses an ARM-based design for its proprietary processors, and not Intel-designed processors - without any significant additional capital investment.
Berenbaum writes that he sees a foundry relationship between Intel and Apple as increasingly likely, "as it would be beneficial to both parties." And he thinks the Street's concerns about the additional capital commitment required from Intel are overblown.
"Investor pushback has been along the lines of potential cap ex requirements from an AAPL foundry arrangement.," he writes. "Our calculations suggest that even half of AAPL’s A6 production would only require to 40,000-50,000 wafers per year, and absorb 1%-2% of INTC’s capacity. It is widely perceived that Taiwan Semiconductor is spending a large amount of cap ex in 2013 primarily to accommodate Apple – this seems only partly true, as our work suggests it has more to do with the requirement to maintain a significant installed base of lagging technology (a requirement that INTC does not have), and already tight capacity at the leading edge (in other words, TSM needs to add leading edge capacity not just for AAPL, but also for Qualcomm, Altera, Xilinix, Nvidia and others.)"
Intel this morning is down 23 cents, or 1.1%, to $21.09.
