Mac Computers Could Use Apple Processors Instead Of Intel Chips

Consumer electronics giant Apple (AAPL) later this month could announce its long-rumored move to in-house chip designs for Mac computers, replacing processors from Intel (INTC), a media report speculated Tuesday.

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Apple could announce the change during its virtual Worldwide Developers Conference, set to begin on June 22, Bloomberg reported. The first Mac computers with Apple's homegrown chip designs are due to hit the market in 2021, it said.

Announcing the move at its annual WWDC would give software developers time to adapt before the new Macs come out.

Apple will use semiconductor technology licensed from ARM, a unit of Japanese tech conglomerate SoftBank Group (SFTBY), Bloomberg said. The new Mac processors would be produced by chip foundry Taiwan Semiconductor Manufacturing (TSM), which makes processors for Apple iPhones and other iOS devices.

Mac Computers Could Get Speed Boost

Taiwan Semiconductor will make the new Mac processors using a leading-edge 5-nanometer production technique, which Intel's fabs can't match, Bloomberg said. Circuit widths on chips are measured in nanometers, which are one-billionth of a meter.

Intel has been making processors for Mac computers since 2005 when Apple switched from the PowerPC architecture it developed with IBM (IBM) and Motorola.

Apple believes its in-house Mac chips will be faster and more power efficient than Intel's chips, Bloomberg said. The change has been rumored for years.

Cupertino, Calif.-based Apple and Santa Clara, Calif.-based Intel declined to comment on the report.

In-House Chips Will Lift Profit Margins

The move to in-house chips will improve gross profit margins for Mac computers, Evercore ISI analyst Amit Daryanani said in a report.

"Apple's ability to in house chip design is underappreciated by investors and we think margin stacking could enable sustained product gross-margin expansion for the company," Daryanani said.

He added, "In-housing the chips should add about 500 basis points to Mac gross margins once the entire product line is on the ARM-based processors. Mac is about 10% of Apple revenue, so the impact on corporate gross margins will be limited."

Apple is holding its Worldwide Developers Conference online this year. It canceled an in-person conference due to the Covid-19 pandemic. At WWDC, Apple will reveal software updates for the iPhone, iPad, Mac, Apple Watch and other devices.

On the stock market today, Apple stock rose 3.2% to 343.99. Earlier in the session, Apple stock hit an all-time high of 345.61. Meanwhile, Intel stock dropped 1% to 63.04.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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