Silicon Valley Is Bracing For A Long-Expected Breakup Of Apple And Intel, Signaling Both The End Of One Of The Tech Industry’s Most Influential Partnerships And Apple’s Determination To Take More Control Of How Its Products Are Built.

Apple Has Been Working For Years On Designing Chips To Replace The Intel Microprocessors Used In Mac Computers, According To Five People With Knowledge Of The Effort, Who Weren’t Authorized To Speak About It. They Say Apple Could Announce Its Plans As Soon As A Company Conference For Developers Monday, With Computers Based On The New Chips Arriving Next Year.

Apple’s Move Is An Indication Of The Growing Power Of The Biggest Tech Companies To Expand Their Abilities And Reduce Their Dependence On Major Partners That Have Provided Them With Services For Years — Even As Smaller Competitors And The Global Economy Struggle Because Of The Coronavirus Pandemic.

Facebook, For Example, Is Investing Billions Of Dollars Into One Of Indonesia’s Fastest-Growing Apps, A Telecom Giant In India And An Undersea Fiber-Optic Cable Around Africa. Amazon Has Built Out Its Own Fleet Of Cargo Planes And Delivery Trucks. And Google And Apple Continue To Buy Upstarts To Expand Their Empires.

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Taiwan Semiconductor Manufacturing, The Partner Apple Uses To Build Similar Components It Designs For Iphones And Ipads, Is Expected To Make The Mac Chips In Factories In Asia — An Arrangement Much Like Apple’s Use Of Foxconn To Assemble iPhones.

Intel And Apple Declined To Comment. Bloomberg Previously Reported On Apple’s Plans.

Apple Has Created A Large Chip-Design Team, Building On The 2008 Purchase Of A 150-Employee Startup, PA Semi. A Large Number Of Them Once Worked At Intel, Including Johny Srouji, Who Reports Directly To Apple’s Chief Executive, Tim Cook.

Apple’s Move Would Be A Symbolic Blow To Intel, Particularly When Civilian And Military Officials Are Concerned Over The Weakening Of U.S. Leadership In Chip Manufacturing, Which They Regard As Crucial To The Country’s Ability To Retain An Edge Over China. Legislation Introduced In Congress Last Week, With Rare Bipartisan Agreement, Would Funnel Tens Of Billions Of Dollars To Bolstering U.S. Research And Manufacturing In Semiconductors.

Intel Has Long Been A U.S. Standard-Bearer In The Semiconductor Business, Particularly In The Complex Manufacturing Processes That Turn Silicon Wafers Into The Chips That Power Computers, Smartphones, Cars And Consumer Devices.

The Move’s Financial Impact On Intel Would Be Muted, At Least In The Short Term. Intel Sells Apple About $3.4 Billion In Chips For Macs Each Year, According To C.J. Muse, An Evercore Analyst. That Is Less Than 5% Of Intel’s Annual Sales, And Muse Forecast That The Blow Would Be Closer To Half That Since Apple Might Change The Chips On Only Some Mac Models. Apple Sells Nearly 20 Million Macs A Year.

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“That’s Not Chicken Feed, But It’s Compared To Total Pcs Sold Of About 260 Million” A Year, Said Tim Bajarin, An Analyst Who Has Tracked Apple For Nearly 40 Years. Intel Supplies The Chips For Just About Every PC.

But The Long-Term Effects Could Still Be Serious For Intel. The Chipmaker’s Lofty Profit Margins Have Long Been Linked To Its Track Record Of Delivering The Most Powerful Computing Engines On The Market, Particularly For Laptops And Computer Servers. But Intel Has Never Done Well Selling Chips For Newer Tech Products Like Smartphones And Tablets.

Intel Has Stumbled Badly In That Industrywide Race To Miniaturize. Intel’s Latest Process For Making Chips, Once Expected As Early As 2015, Did Not Enter High-Volume Production Until 2019. The Delay Aided Taiwan Semiconductor And Samsung Electronics, Which Produce Chips Designed By Multiple Companies. The Competitors Exploited Intel’s Lag To Take A Technology Lead.

“Intel Has Fallen Behind By 12 Months, Maybe 18 Months,” Said Handel Jones, Chief Executive Of International Business Strategies, Which Offers Consulting Services To The Chip Industry.

Apple Was Troubled By The Production Stumble, According To Three People Familiar With The Situation, Who Were Not Authorized To Speak About Confidential Dealings Between The Companies. Intel Also Ran Into Stronger-Than-Expected Demand For Other Types Of Chips, Causing Production Shortages That Crimped Sales For Some PC Makers Last Year. The Combination Further Tarnished Intel’s Image As A Reliable Producer.

Also Read: TheNewYorkTimes

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