Patrick Moorhead: Apple’s plan to dominate silicon

“Before creating my industry analyst and research company, I was fortunate enough to spend over a decade as an executive in semiconductors at Advanced Micro Devices and nearly another decade as a PC and server OEM at Compaq (purchased by HP), AT&T GIS and NCR (purchased then spun out by AT&T),” Patrick Moorhead writes for Forbes. “I’ve met with some very colorful people along the way including Tim Cook at Compaq, Mark Hurd at NCR and Jerry Sanders at AMD.”

“All this time spent at OEMs and chip companies hopefully gives me some unique perspective on how Apple is disrupting semiconductors,” Moorhead writes. “Apple currently buys more silicon than any other vendor but also designs more silicon than any other vendor, too. And their silicon, especially their Fusion SoCs and CPU architectures, are best in mobile class in CPU performance and very competitive in GPU performance.”

“Apple believes that by owning iOS, the iOS ecosystem, and now the silicon, it can deliver a better user experience,” Moorhead writes. “Has it worked for differentiation? I’d say it has worked so far. Apple has consistently cranked out unimaginable improvements in CPU and GPU, 30 to 40% improvements each new product. That’s unheard of, particularly with CPUs at the same power use. Competitively, Apple dominates in single CPU performance, is competitive in multi-core CPU performance and has competitive GPU performance.”

“With Apple’s cash balance, they could easily snatch up AMD, drop X86, and re-target all those resources to ARM-based processors and GPUs to support… larger and more powerful iPad Pro ‘Plus’ [devices],” Moorhead writes. If you’re still a doubter, then consider what Apple could do with their $250B in cash. NVIDIA is worth $90B, Qualcomm $86B, and AMD $11B.”

Much more in the full article – very highly recommendedhere.

MacDailyNews Take: Imagine Wall Street on the day Apple buys AMD.

SEE ALSO:
Apple embarrasses Intel – June 14, 2017
LAPTOP reviews Apple’s new 10.5-inch iPad Pro: Amazingly fast performance beats most Windows laptops – June 12, 2017
Apple, a prodigious chipmaker, has some major competitive advantages – May 31, 2017

13 Comments

    1. Did you not read the article? Apple has an in house chip design group.

      It’s also a lot of nonsense about Apple buying AMD. That’s one of the worst ideas I see coming up every few months. AMD mostly makes x86, licensed by Intel, through an architectural license. Intel has shown a very strict view about how that works. In the license, Intel has the right to strip the license away if the company is bought by another entity. In fact, when AMD spun off Their foundry operation, and a majority portion was bought, Intel threatened to take AMD’s license. They negotiated, and Intel allowed the license to continue.

      But if Apple, or anyone else actually bought AMD itself, Intel would throw a fit. Likely, the court battles would be tremendous, would take years, and cost a vast amount of money. It wouldn’t be worth it. And apple wouldn’t want them for x86 anyway, so what’s the point? Just the ATI graphics division? Hardly worth the trouble.

      1. Moorhead, in the article, postulates Apple buying AMD (and dropping X86), which is why MDN mentioned it in their take, which culi cula referenced (mistakenly identifying MDN as AMD). Everyone read the article except you.

    1. If that’s the case, then why is Apple using AMD GPUs and putting the upcoming Radeon Vega in the iMac Pro?

      I believe AMD is the cheapest route in terms of purchase but NVIDIA is putting AMD to shame in terms of value. It’s just at this point in time NVIDIA seems a tad overvalued but then again, what do I know. They must be selling a hell of a lot of silicon to make their value rise so quickly. Is anyone buying Ryzen CPUs in quantity? Hardly.

      I’ve got this fear that any company Apple acquires will quickly lose its value. Almost anything Apple gets its hands on is criticized as being worthless.

      1. “I’ve got this fear that any company Apple acquires will quickly lose its value.”

        With the acquisitions being discussed here, that’s inherently true.

        Think about it this way… if Apple were to buy say AMD, then the value of the company to Apple comes from the margin savings they’d otherwise be paying as profit for AMD. However, the revenue that AMD was getting from other customers besides Apple goes away entirely.

      2. You’re talking about GPUs, not CPUs. The reason why Apple has been using AMD graphics is a simple one.

        Apple invented Open CL. Nvidia invented CUDA. AMD had its own equivalent, but it didn’t do well. While Nvidia went all in with CUDA, and has just minimal support for Open CL, AMD went full in with Open CL, which Apple gave put as a royalty free standard, and which is doing moderately well. Why would Apple continue with Nvidia when they refuse to fully support Apple’s preferred standard? Apple is highly reliant upon GPU performance, and Nvidia just doesn’t offer it for what they need.

        I hope that clears it up.

        But as for CPUs, what’s the point? Even Ryzen is just matching Intel’s offerings, at best. And we can be sure that Apple receives sufficient discount that moving to AMD for price isn’t worth it.

        If Apple is concentrating on ARM, the AMD is worthless. They were working on ARM server chips, but abandoned them

  1. I didn’t know AAPL was that strong in the semi arena but sounds like a good story to me. Granted there’s lots of noise in metrics like PE ratios but I couldn’t help but notice that the average forward PE for semi stocks is 68x while the average for semi equipment OEMs is 22x. Now I’m not saying AAPL should be classified as a pure play semi, but just a smidgen of that PE premium they enjoy might not be too much to ask…

  2. With Apple’s cash balance, they could easily snatch up AMD

    Yeah, only yesterday I was pointing out that common request of Apple. But Apple would want AMD for the GPUs to be used on x86 CPUs, thereby wanting AMD for their x86 technology as well.

    I don’t see Apple needing anyone in their continued development of ARM based GPUs. But insight is always welcome.

  3. I don’t think they need AMD. If they bought anyone it should be ARM. They could squeeze the hell out of Samsung. Apple used to have a huge chunk of ARM but sold off their stake (most or all, I’m not sure) when they were in dire straights near the end of the first Steve Jobs drought. Apple in charge of ARM would send the mobile industry reeling.

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