Perspective on “Apple getting into the chip business”

Nov.07, 2008 in Investment Opinions, U.S Hot Stocks

At one time, Apple was dependent on Motorola for the PowerPC processors. Motorola’s game plan veered toward embedded systems and their PowerPCs languished. Apple wasn’t able to obtain microprocessers that were as speedy as the Intel based competition.

So they switched to IBM and were once again left in the lurch. IBM didn’t show much interest in developing low power devices for laptops. That’s where Apple’s business was heading.

Leaving IBM for Intel proved to be the best decision Apple could have made. The recent migration from the Windows platform to Macs was made possible by the ability to run Windows on a Mac. That would not be possible without the Intel partnership.

So far so good. But Apple has twice had their horse shot out from underneath them by chip suppliers. Having control of their own destiny, especially with the incredible market potential that the iPhone represents, would be very appealing.

Another irritant is the fact that chip companies who partner with Apple offer the same wares to Apple’s competitors. They just put Nvidia graphics processors into the new MacBooks and MacBook Pros. Nvidia will surely be offering those same chips to competitors like Dell.

I think Apple’s priorities would center on developing a processor with amazing power management features and outstanding performance. A chip supplier, like Intel, might have different priorities. For example, they might want a less costly design for appeal to the larger market (Apple’s competitors).

It’s only logical that Apple would want to produce their own microprocessors for mobile devices.