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RBC: Intel in talks with Apple to build iPhone processors

November 30, 2012: 10:50 AM ET

Intel's proposal: We build ARM chips for iPhone if Apple switches to Intel chips for iPad

375982931706FORTUNE -- Hot on the heels of his colleague Amit Daryanani's speculation about where Apple might go to supplement -- or entirely replace -- Samsung as the sole supplier of processors for Apple's mobile devices, RBC Capital's Doug Freedman reports Friday that Cupertino is already in talks with one of top contenders: Intel.

Acknowledging that there's been speculation about this in the past, Freedman moves the ball forward by spelling out the terms of a possible deal:

  • Intel (INTC) would agree to use Apple's preferred architecture for the iPhone -- the one from Intel's British rival, ARM Holdings (ARMH).
  • In return, Apple (AAPL) would agree to switch to Intel's x86 architecture for the iPad.

According to Freedman, Apple's demand for 12-inch system-on-a-chip wafers in 2013 could approach 415,000 -- outstripping Samsung's ability to supply.

"We believe," he writes, that "Intel has the upper-hand due to the limitations of capacity at alternative sources" -- chiefly TSMC (TSM) and GlobalFoundries.

He estimates that the revenue for whomever gets Apple's foundry business will be roughly $2 billion in 2013, assuming 415,000 wafers at $5,000 a pop.

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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