WWDC: Will Intel chips power future iPhones?

By Jonny Evans

WWDC 2011, Day 2:. The post-keynote hangover may have set in, but it doesn’t take much imagination to recognize Apple [AAPL] has lots of surprises for us in the months ahead, including Voice Controls in iOS 5, Find My Mac, larger screen iPhones and, further down the road, a move to Intel for Apple’s mobile devices (perhaps).

iosfive_0.jpg

[ABOVE: You can also anticipate iOS widgets -- did everyone really miss the ‘Hourly weather forecasts’ and real-time stock quotes briefly noted as new features in yesterday’s keynote?]

Apple's got choices 

Citigroup analyst Glen Yeung yesterday repeated speculation that Intel might enter into a deal with Apple to manufacture its self-designed ARM-based chips for iPhones, iPads and iPod touch devices.

"Our discussions with the hardware supply chain tend to support this belief. Intel has previously acknowledged they would be amenable to such a relationship, under the right conditions. We suspect one such condition includes the potential for Apple to eventually convert from an ARM-based core for handsets and tablets to x86. Given the growth opportunity this opens for x86 processors, we would view such a foundry relationship, were it to happen, positively."

With Apple’s current iOS chip supplier, Samsung, involved in some futile courtroom drama with Apple  over its overt-seeming emulation of that company’s iOS devices, down to the ARM chip inside its own Galaxy attempts, it is clear Apple doesn’t want to trust its future to the South Korean firm. This means it is certainly seeking solutions. And Intel wants to be part of the only rapidly growing game in town (Android is too fragmented to be interesting beyond strategic placement with key makers and flagship devices).

[This story is from Computerworld's Apple Holic blog. Follow on Twitter or subscribe via RSS to make sure you don't miss a beat.]

Piper Jaffray analyst Gus Richard said last month that Intel was "vying" for Apple's foundry business. Now, Yeung thinks Intel’s Tri-gate transistor technology is the big sexy to clinch a future Apple deal.

He thinks Intel may make ARM-based chips for Apple for a while, but a move to Intel’s own processors would follow as part of the deal.

"Should such a deal materialize, we expect Intel will initially produce ARM-based solutions for Apple at 22nm. With an ARM-architect license, we see no hurdles to this. But as Intel readies 14nm (2013), potential for a shift to x86 exists. At that stage, Intel would have appropriately moved along the SOC learning curve. We believe Intel’s recent cap-ex increase, geared predominantly for 14nm, may have been inspired by the potential for an Apple relationship. Recall Intel is building a new fab in Arizona (Fab 42), geared specifically for 14nm."

This sounds insane, of course. Intel CEO Paul Otellini has seemed utterly determined that he will not create ARM-based chips in his fabs. The Financial Times tells us, "Intel chief executive Paul Otellini was asked this question at the recent investor day, and by all accounts, went red with rage."

Will PCs gain some 'X' appeal

There's one more thing. Is there any significance to Apple's move yesterday to drop the word "Mac" from "Mac OS X"? Lion is now OS X, not Mac OS X. Could this mean anything?

Recall:

  • Mac sales account for a decreasing share of Apple's profits.
  • The future of computing is mobile and in the cloud.
  • For iCloud to succeed it needs the widest possible distribution of compatible appliances.
  • IDC tells us the entire PC industry is shrinking while Apple's share climbed 28 percent.
  • Apple is the world's biggest mobile company.
  • And take a look at this PC Pro story, too.

You see, Apple already admits that in the Post-PC future the PC is "doomed, doomed, doomed" (more or less).

The focus on the iCloud means it must want its PC software to be as widely distributed as possible, if only to support its 200 million and growing iOS devices.

Could Apple be setting the scene for something as unthinkable as OS X licensing? I'm not saying it is, but there's a certain historical determinism which could drive that plan.

Apple sure has come a long way.

Recall Bill Gates' quote from June 1998, when Intel and Microsoft were worth 96 times what Apple was worth: "What I can't figure out is why he [Steve Jobs] is even trying? He knows he can't win."

One of the two men was wrong.

Signing off, iPhone 5 seems set for September, at least according to the group think. Irish betting house, Paddy Power has cut its odds on September iPhone 5 launch from 9-2 to 9-4 after "significant betting" on the date over past 24 hours.

Let us know your thoughts in comments below. I'd also very much like to invite you to follow me on Twitter so I can let you know when I post new reports here first on Computerworld.  

Read the four-page WWDC report:

On page 1: "WWDC: Apple's iCloud is 'one cloud to rule them all'"

On page 2: "WWDC: Apple's iOS 5 eats RIM, gets 'Post-PC' updated"

On page 3: "WWDC: Apple's Mac OS Lion will cost $29.99, more"

On page 4: "WWDC: Industry speaks on Apple's iCloud post-PC attack"

Copyright © 2011 IDG Communications, Inc.

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