Apple's homegrown chip could wipe out up to $5.2 billion of Intel revenue

Stephen Lam/Getty ImagesApple CEO Tim Cook with the company’s 12-inch MacBook.

  • Apple is reportedly working on its own processors for its Mac computers, which could ship as soon as 2020, according to reports from Bloomberg.
  • Apple’s in-house chips would replace Intel‘s chips, thereby wiping out billions of dollars in revenue, Wall Street analysts found.
  • You can view Apple’s stock price and Intel’s stock price here.

Apple‘s reported plans to ditch Intel‘s processing chips in favour of its own has the potential to wipe billions of dollars of revenue from the chipmaker.

That total potential impact could reach between $US3 billion and $US4 billion ($AU5.2 billion) of lost sales, according to RBC Capital Markets. The bank looked at the number of Mac computers with Intel units sold last year, which was roughly 19 million units, as well as the average selling price for its microprocessing units ($US170 to $US215) to arrive at that number. Credit Suisse analysts figured the switch could cost Intel $US2.7 billion.

“We think AAPL’s potential shift to in-house designed Mac processors could create a modest impact for INTC depending on the magnitude and timing of the transition,” Amit Daryanani, an RBC analyst wrote in a note to clients.

On Monday, when Bloomberg reported Apple was mulling building its own processors for its Macs, Intel’s stock fell 5% on the news.

However, Credit Suisse analysts said the stock move was largely overblown because Apple’s reported switch would only impact 4% of Intel’s potential revenue and 4% of its earnings, or 17 cents per share.

“It is clear to us that AAPL has been working towards a goal of “moving up the stack” if only to keep INTC “honest” – but we see the sell-off as an over-reaction, especially ahead of what we expect to be strong earnings,” Credit Suisse’s John Pitzer and Steven Jozkowski wrote in a note to clients.

Intel will report its quarterly earnings on April 26. Wall Street analysts expect the company to report strong sales and profits largely thanks to Intel’s Data Center Group, which markets itself to enterprises and is seen as the company’s primary engine for future growth.

Apple’s stock was flat on Tuesday while Intel’s was up 1.17%. Intel was still up 3.36% for the year.

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