Will Intel Build Apple's A9 Chip?

According to Digitimes, Intel is in the running to build Apple's upcoming A9 system-on-chip product. Though Apple has traditionally used Samsung, it looks as though this year's A8 will be mostly -- if not exclusively -- built at contract foundry Taiwan Semiconductor . Will Apple shift some business over to Intel, or is this an unfounded rumor?

What could drive such a deal?
Apple is a company that typically wants to make sure that its products are differentiated in a way that the user cares about. Though Apple isn't big on touting specs, it does care very much about the performance delivered to the user, which is why it puts so much effort into designing its own chips, and moving to the best manufacturing technology available to it.

If Intel's claim that its 14-nanometer process offers superior performance/power/area relative to its competition holds true, then it's pretty clear why Apple could potentially be interested -- it wants to be able to make the best chips that it possibly can.

Is this deal possible, though?
In this day and age, the design of a complex system-on-chip requires a close collaboration between the semiconductor manufacturer and the actual design teams. If Apple is designing its chips for Intel's 14-nanometer manufacturing process -- particularly for a product that's going to need to go into volume production by mid-2015 -- then Apple would have had to start that process quite a while ago.

More to the point, Apple can't just decide at the last minute that it wants to place orders with any given chipmaker, and then the chips pop out in time for the next iPhone/iPad products without having designed the chip on that manufacturer's technology. Another thing to consider is that Intel is still very new to the semiconductor foundry business, so going with Intel -- even though it has the best technology -- may be risky for reasons beyond the technology.

Don't expect a deal at 14-nanometer -- but 10-nanometer could be up for grabs
It seems likely at this point that Apple will dual source at TSMC and Samsung at the 16/14-nanometer generation. However, at 10-nanometer, Intel could have a shot. If Intel holds true to its claim at its latest Investor Meeting that it would go into high volume production by the end of 2015, then this could be very attractive to Apple.

That being said, with the woes that Intel is going through at the 14-nanometer node, the timing of 10-nanometer is now a bit uncertain. This is magnified by the fact that Intel's in-house products will probably launch before any foundry customers' products will. More to the point, volume production in 4Q 2015 for Intel's in-house products would signal production for a foundry customer in Q1-Q2 2016 at the earliest. This wouldn't be impossible, but it would be pretty tight.

Foolish bottom line
As an Intel bull, it would be nice to see Intel grab Apple's A-chip business; but realistically, it's probably not happening at the 14-nanometer generation as Digitimes claims is possible. At 10-nanometer, Intel probably has a better shot; but even then, it's not something that investors should base their decisions on whether or not to buy Intel stock.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

The article Will Intel Build Apple's A9 Chip? originally appeared on Fool.com.

Ashraf Eassa owns shares of Intel. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story