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Analysts suggest Intel hands Apple the keys to its Arizona semiconductor facility

Posted: , by Luis D.

Analysts suggest Intel hands Apple the keys to its Arizona semiconductor facility

Intel is forced to make compromises. Not only was 2013 a third consecutive year of troubled sales across most departments handled by the chip-maker, but the company predicts 2014 will be another year of stalled growth in the integrated circuit (IC) market. Meanwhile, analysts say IC will remain a perspective field, which could expand its sales volume by 7% this year. In January, the chip maker said that it will postpone equipping its newly built Fab 42 facility in Chandler, Arizona. This cutting-edge factory, worth $5 billion, was intended to produce up to 40,000 300mm chip wafers monthly. It was going to be the first to utilize a 14nm production process, and set to escalate to 10nm once 14nm production ramped up. Yet, it appears it won't open anytime soon...

...unless Intel does as analytics company IC Insights suggests, and lend it to a competing company - possibly Apple. After its relationship with Samsung went sour, the iPhone maker made moves to distance itself from the Korean company. Eventually, it wants to completely sever its manufacturing and business ties with it. Yet, in 2013, Sammy remained Apple's leading silicon supplier, producing up to $3.4 billion worth of chips for Cupertino. Meanwhile, Apple's other CPU contractors, TSMC (Taiwan) and Globalfoundries (Singapore), are unable to fully meet demand. TSMC, in particular, is unwilling to dedicate an entire facility to a single client, no-matter that it's Apple knocking on its doors.

IC Insights believes Intel is in a comfortable, and vulnerable enough position to consider commissioning a whole factory, outfitted with the latest and greatest in chip-making technology, to a huge client. According to the analysts, Intel is "approximately one year ahead of both Samsung and TSMC in terms of IC process technology". This is a circumstance that could see Apple gaining "significant performance advantage" and Intel making a tidy profit, if the two were to strike a deal.

As powerful as it is, Intel hasn't been able to establish itself in the crucial mobile chipset market. Meanwhile, shipments of personal computers have been steadily falling since 2010. Furthermore, the competition (AMD) has been taking advantage of ARM-based processors to dismount the company's dominance in the server segment. Intel is pressured into taking desperate measures, such as paying tablet manufacturers the difference between its newest Atom-based Bay Trail CPU and an ARM processor, should the manufacturer choose to opt for the former. This strategy could cost the chipset maker an estimated $500 million through 2014.

Intel and Apple haven't commented on a possible deal.

source: IC Insights via DigiTimes

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posted on 13 Feb 2014, 10:16 2

1. Taters (banned) (Posts: 6474; Member since: 28 Jan 2013)

Apple is too greedy to do something like this. Benefit the customers by leasing intel's technology? Please! We will just offer them the same old less than 720p screen, 1gb of ram, and dual core chips and we will mark up the price of our phone even more.

The A7 was actually pretty out of character for Apple. Don't expect them to spend money like that again anytime soon.

Samsung would gladly put money into something like this though but I don't think intel would risk handing a direct competitor the entire mobile chip market.

posted on 13 Feb 2014, 10:40 3

3. a_merryman (Posts: 749; Member since: 14 Dec 2011)

What? The article just suggests that Apple move manufacturing its chips from Samsung to Intel's foundries. Intel would be making Apple's designed chip at their foundries if this came to fruition. No leasing technology.

And why would Samsung gladly put money into using Intel's foundries instead of their own? That would cut into Samsung's business....that makes no sense, at all.

posted on 13 Feb 2014, 23:19

13. Taters (banned) (Posts: 6474; Member since: 28 Jan 2013)

No the article is suggesting that Apple leases the Intel foundry to make their own chips, not contract Intel to make them.

Samsung would gladly put money into it because they are supposedly superior which would save Samsung a ton of restructuring and R&D costs because Intel would have done all the hard work already.

Makes perfect sense and you need to re read the article.

posted on 14 Feb 2014, 00:33

14. a_merryman (Posts: 749; Member since: 14 Dec 2011)

Just like how Samsung leases their facilities, or TSMC, or Globalfoundries.....those companies definitely don't just fabricate the chips to Apple's specifications. No, they lease the facilities to Apple and Apple makes them themselves, right. /s

Samsung is one of the biggest chip makers in the world, they probably want to be the biggest. It makes no sense for them to contract Intel to make the Samsung chips for Samsung. And Intel surely wouldn't be selling the more advanced fab facility to Samsung and lose their edge. Samsung already has many advanced fabrication facilities, they just expanded one in Texas not that long ago.

posted on 16 Feb 2014, 18:14 1

18. elitewolverine (Posts: 5192; Member since: 28 Oct 2013)

Wasn't it apple who brought what you come to know as a smartphone to the masses, wasn't it apple who brought forth better resolutions, who brought forth 64bit in mobile os (droid is not there yet)...

Oh wait you actually think droid brought this to people. No droid brought the masses $0 dollar chump phones on contract.

posted on 13 Feb 2014, 10:25

2. Augustine (Posts: 1043; Member since: 28 Sep 2013)

Apple? No, it's better off as a fab-less chip maker. Now, TSMC, Globalfoundries and UMC could buy the Chandler fab and get much needed capacity.

posted on 13 Feb 2014, 18:45 1

10. superduper (Posts: 151; Member since: 20 Oct 2013)

The suggestion is not that Apple buy the fab. Rather, it's that Intel utilizes its dormant Arizona fab to produce A series chips on contract for Apple.

posted on 13 Feb 2014, 11:06

4. domfonusr (Posts: 584; Member since: 17 Jan 2014)

This actually isn't too big of a stretch. Apple's Mac OS X computers all use Intel's 64-bit CPU chips, specifically the Core i5 and the Core i7. Intel's 64-bit mobile chips would be elevated in popularity and status if they made an appearance in the next iPhone.

posted on 13 Feb 2014, 13:04 1

6. brrunopt (Posts: 742; Member since: 15 Aug 2013)


posted on 13 Feb 2014, 13:16

8. domfonusr (Posts: 584; Member since: 17 Jan 2014)

Laugh all you like. I am no Apple fan, but when it comes to the US market, this is quite true. Sad as it is, Apple is a real king-maker for US industry. Look at how the patent system bows to them, among other sectors. Apple has money to spend, and all sorts of other players know that in order to have success like Apple, they must do as Apple does, even if they must lose their souls in order to do it. It isn't good for consumer freedom, but it is good for Apple and others who kiss up to them. Keep an eye on Apple, and follow the money.

posted on 13 Feb 2014, 18:53

11. superduper (Posts: 151; Member since: 20 Oct 2013)

X86 chips are expensive, high margin products. This makes them undesirable to hardware companies, especially OEMs that sell barely profitable PCs. They are a necessary evil due to Windows' inextricable dependence on the instruction set. Also, X86, until Haswell, has favored performance over power efficiency. A Core i5/i7 in an iPhone or iPad would fry an egg and run out of battery in half an hour. :-)

posted on 13 Feb 2014, 18:59

12. domfonusr (Posts: 584; Member since: 17 Jan 2014)

I said a 64-bit 'mobile' chip in an iPhone, not a Core i5 or i7, or anything with x86 architecture. Intel makes these Atom-based Bay Trail processors for mobile, not x86 chips. Yes, Intel's Core processors are far too power hungry and over-heating-ish to ever go in a mobile device.

posted on 14 Feb 2014, 06:21

15. superduper (Posts: 151; Member since: 20 Oct 2013)

But Bay Trail is x86.

posted on 14 Feb 2014, 10:01

16. domfonusr (Posts: 584; Member since: 17 Jan 2014)

Is it? If so, then ok. But the fact is that it is designed for mobile applications, and doesn't have nearly the power needs or heating of, say, a Core i5 or i7. Still, Intel doesn't play in the 'RISC processor' space like ARM and others do. They did put an Intel mobile chip into an overseas Motorola smartphone model last year or the year before, didn't they?

posted on 14 Feb 2014, 11:24

17. superduper (Posts: 151; Member since: 20 Oct 2013)

Yes, it had an Atom processor and ran Android for x86.

posted on 13 Feb 2014, 11:44

5. jove39 (Posts: 1979; Member since: 18 Oct 2011)

If intel and apple come together...it'll be in best interest of both and consumer...intel will get some $$$ and apple will get access to best foundry.

posted on 13 Feb 2014, 13:07

7. brrunopt (Posts: 742; Member since: 15 Aug 2013)

Not going to happen unless they are stupid..
Yes, they would make a few bucks now by leasing the factory but it would completly undermine the Atom line and any grow they would have on the mobile front...

posted on 13 Feb 2014, 17:02

9. markhsu (Posts: 15; Member since: 17 Mar 2012)

Sorry to burst bubbles but Intel isn't going to spend billions to be a low margin contractor. Eventually Apple will have to come to them because Intel's manufacturing is so far advanced than anyone else and it will be down to either Intel or Samsung for Apple's chips. So why bow out early when you can wait out Apple to port over their software to x86 ISA chips? If Intel became a contract mfg they will enable designers using ARM ISA to build chips it never thought possible because of Intel's mfg prowess. No way are they going to help a competing ISA gain more market share. Short term pain for long term pain.

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