Apple to Ship Macs With Its Own Processors, Instead of Intel's, Later This Year

Apple's custom silicon will result in apps that work seamlessly across its family of devices, the company said.
Author:
Publish date:

At WWDC, Apple officially announced that it's ditching Intel chips in favor of its own custom-built processors for Macs in a move that CEO Tim Cook described as "historic." 

The new chip architecture will deliver better performance and allow developers to more easily build apps that work across the whole ecosystem of Apple devices, the company said. 

“Every time we’ve done this, the Mac has come out stronger and more capable,” said Cook at Apple's all-virtual keynote on Monday, referring to the adoption of new chip standards in Macs over time.

Apple  (AAPL) - Get Report shares were up 2.59% on Monday afternoon to $358.82, while Intel  (INTC) - Get Report shares rose slightly to $60.02. The Apple announcement had been expected, based on media reports in recent weeks, although investors were unsure of the exact timing. 

Analysts expect that switching to custom-built chips will give Apple more control over its product releases, and potentially boost its margins over time.

"Apple has made enormous investments in [its] ARM chip design and it's logical that it extends that capability beyond the iPhone and iPad," said Geoff Blaber, VP of Research at CCS Insight, a mobile research firm. "Its motivations for doing so include reducing its dependence on Intel, maximizing its silicon investment, boosting performance and giving itself more flexibility and agility when it comes to future products." 

Apple says that using its own silicon, which consists of a family of systems-on-a-chip (SoCs) aimed at optimizing Mac performance, will deliver speedier performance along with lower energy usage. To demonstrate the improved performance, Apple's head of software engineering Craig Federighi showcased Microsoft  (MSFT) - Get Report and Adobe  (ADBE) - Get Report cloud software that had been optimized using the new standard. 

In addition, the architecture will make it easier for developers to build apps that work smoothly across iOS, MacOS and its other operating systems with less legwork. 

Cook said that the first Macs with Apple silicon will ship by the end of this year, and that the entire transition will take about two years.

"While a transition of this magnitude can take time and effort, it also allows Apple to have better control over its supply chain and maybe even push for margin expansion in the long run," said Daniel Martins, Apple Maven and independent financial researcher. "The announcement was largely expected, however, and I don't believe that it will be a significant stock mover in the short term."

Alongside the silicon announcement, Apple also previewed its latest MacOS version, called Big Sur, which it says will help enable the transition away from Intel. The new MacOS version contains a number of enhancements, including an overhaul of Safari, Apple's web browser, as well as improved privacy features.

Apple shares are up 19% year to date. 

Apple is a holding in Jim Cramer’s Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL? Learn more now.