Apple’s shift into chip design

The Wall Street Journal is reporting on Apple’s efforts to assemble the people and intellectual property pieces into a strategy to exploit opportunities for exclusive features and to take back control over its product release cycle.

While I can understand and appreciate Apple’s desire to limit 3rd party involvement around new and updated products, what interests me the most is Apple being in the position to control it’s popular iPhone and iPod line literally from the ground up with custom chips tailored towards multicore processing and the ability to harness the computing power of the graphics processing unit (GPU) to lend a helping hand in delivering HD quality graphics on the mobile platforms.

Smart move Apple, but I suspect there will be some growing pains particularly with scaling. The WSJ believes it will take Apple one year to release new devices with the home made chips. I say it will take at least two… Anyone wiling to play over/under?

4 thoughts on “Apple’s shift into chip design

  1. Not willing to play the over/under but what are your thoughts on how this will differ from the Power PC challenges Apple faced?

    It takes a while to ramp up on a core competency so I tend to agree with your timeline. I just don’t get why anyone would want to get into the chip business. Especially after the Power PC debacle.
    Innovations in this space are hard to come by and if they were to occur – I’d put my money on an existing player.

    Wasn’t this the reason why they decided to go with Intel to begin with?

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  2. @Mikal,
    For desktop and server class CPU’s, I agree with you 100%. The main reason for the Intel switch were as follows:
    – IBM was producing a low yield of chips and in 2003-2005 could not (would not) produce a 3Ghz PowerPC G5 chip. (Desktop line suffers)
    – The G5 chip was a furnace and could not be easily deployed in a laptop. (Laptop line suffers x2 which is was the fastest growing segment in personal computing at the time.)
    – Intel could provide the chips and the complete motherboards.

    Now that’s just the desktop line, which I suspect Apple will be working with Intel for a few more years while they build up capacity.

    Apple is moving to control the ARM like processors that run its iPod/iPhone line and they are snapping up executives from AMD with Graphics experience. To design and produce these chips is a less complex process. You add that with today’s announcement that an XBOX Strategy and Marketing executive is joining Apple, and the thrust is clear. Apple is moving into HD video and gaming in a big way.

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  3. @matchz – Words like monopoly are very specific and shouldn’t be taken lightly.

    Having a monopoly (or dominant market position) is not illegal. Behaving in a monopolistic way is. Apple would first have to be determined to have a monopoly (which they do not if you look at the overall MP3 player market including flash based players). And second the government would have to determine that Apple behaved in a way that hindered competition – they have not by building chips in house, if they purchased the dominant chip supplier maybe.

    Apple is already pretty vertically integrated (more so than any software or consumer hardware company). This just takes it even one step further.

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