Apple shift from Intel to ARM could bring Windows PC makers

Intel has been able to weather significant product delays and technology missteps in recent years without much impact on its sales. But Apple’s expected decision to shift its line of Mac computers from Intel processors to its own homegrown alternative could set off a more damaging chain of defections, some analysts warn.

Apple has used Intel processors in Mac desktop and laptop computers since 2006 after it abandoned the PowerPC chip architecture made by IBM and Motorola. At the same time, Apple has been designing its own chips for iPhones and iPads, relying on some underlying technology from ARM and manufacturing by Taiwan Semiconductor.

Now Apple plans a grand chip convergence. At its Worldwide Developers Conference (WWDC) on June 22, Apple plans to announce that it will begin using its own processors in new Macs in 2021, similar to the chips in its iPhones, Bloomberg reported on Tuesday.

Apple and Intel declined to comment to Fortune.

While Apple accounts for only a small portion of Intel’s overall revenue, which is expected to total almost $74 billion this year, it has long been a design leader for the entire PC industry. If Apple switches from Intel’s x86 line of chips and gains better performance and battery life, Windows PC makers like Samsung or HP could follow suit, especially now that Microsoft is optimizing its software for ARM-based devices (including its own Surface X tablet).

Apple’s shift, if successful, could be “opening up the floodgates to greater acceptance of more non-x86 alternatives,” Bernstein Research analyst Stacy Rasgon wrote in a recent report.

Several major PC makers asked about the issue by Fortune said they already had a few models running ARM-based processors. HP’s Envy 2 two-in-one laptop and Acer’s Chromebook R13 used ARM-based chips from Qualcomm and Mediatek, respectively, the companies said. Dell, which did not mention an ARM product yet, noted: “We continue to evaluate all CPU options as part of our roadmap plans.”

Lenovo and Samsung did not comment. Samsung’s Galaxy Book S and Lenovo’s Yoga 5G laptop run on ARM chips from Qualcomm.

Intel has been in a rut for several years amid difficulty moving its chip manufacturing to the latest technology. Taiwan Semi has had no such problems, fueling the performance of Apple’s mobile chips and those from other Intel rivals like Advanced Micro Devices and Qualcomm.

Apple’s chip transition announcement at WWDC will be delivered to an audience of developers who will have to rewrite their software to be compatible with the new chips. That could take a long time, reducing the appeal of Apple’s new devices during that period. When Apple moved from PowerPC chips to Intel, it provided a way for customers to run older software on new devices through software called Rosetta. But Apple hasn’t yet disclosed whether it will offer something similar this time around.

Still, even if Apple’s own transition is successful, the shift by other PC makers is hardly assured. While Apple’s iPhone and iPad chips have outpaced Intel chips on some benchmarks, recent Windows-based devices running on similar ARM-based chips from Qualcomm have not fared as well, and reviewers found them, at times, laggy and underwhelming.

That may be why Intel’s stock barely budged following the report about Apple’s chip plans. Shares of Intel, which have gained 6% in 2020, were down about 1% on Tuesday in midday trading. Apple shares, which have gained 16% this year, were up 3%, possibly as investors grew excited about in-house chips reducing cost and boosting profit margins.

Over the past year, Apple has had some turnover in its chip efforts, which are overseen by senior vice president Johny Srouji. Lead chip architect Gerard Williams III left last year to create chip startup Nuvia. Apple responded by suing, claiming Williams was poaching Apple employees. Apple hired one of ARM’s lead architects, Mike Filippo, after Williams left.

(This story was updated on June 10, 2020 with additional comments from PC makers.)