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Good morning. Fortune digital editor Andrew Nusca here, in for Adam.
Intel stock wavered after the closing bell yesterday after a new report appeared claiming that Apple would use its own chips, rather than Intel’s, in future Mac computers. The effort, code-named Kalamata, “comes as part of a larger strategy to make all of Apple’s devices—including Macs, iPhones, and iPads—work more seamlessly together,” reported Ian King and Mark Gurman of Bloomberg.
We’ve seen this picture before, though it’s been awhile. It was way back in 2010 that Steve Jobs himself, skinny as a rail, debuted the ARM-based Apple A4 chip alongside the then-new iPad in San Francisco. “Jobs took inordinate pride when he unveiled the A4,” wrote Apple watcher John Gruber. “Doing custom silicon in-house was a new direction for Apple.”
Eight years later, the empire reportedly strikes back. Though Mac sales don’t mean as much to the company as they once did—in Apple’s most recent fiscal quarter, the product line represented just 8% of overall revenue—a switch to home-brewed chips sends several clear messages.
The first: That Intel (INTC), after all these years and billions of dollars spent, still hasn’t created market-leading mobile chips. (And won’t.) The second: That the modern Mac is becoming so iPad-like that ARM architecture, built for low-power devices and not general computing, may be preferred. And third: That Apple (AAPL), flush with cash, continues to operate with the conviction that the extraordinary overhead of developing semiconductors in-house is worth the competitive differentiation and performance that a home-grown chip brings.
As CEO Tim Cook said in a 2009 quarterly earnings call: “We believe that we need to own and control the primary technologies behind the products we make.” It’s a perspective that keeps an otherwise commoditized industry interesting, and one that should give pause to every one of Apple’s corporate partners.
