What Apple Silicon Means for Intel’s Stocks?

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What Apple Silicon Means for Intel's Stocks?
--FILE--The logo of Apple Inc. is illuminated with red light to mark the World AIDS Day at an Apple Store in Guangzhou city, south China's Guangdong province, 1 December 2018. Apple Inc. said Tuesday that its revenue of the fiscal 2019 first quarter has fallen 5 percent to 84.3 billion U.S. dollars from the year-ago quarter, the first time that the U.S. hi-tech giant has reported a revenue decline for the quarter ending in December in more than 10 years. Market analysts attributed the drop in earnings largely to the company's disappointing sales in China as Apple reported a 15 percent decline in iPhone revenue for the first quarter ending on Dec. 29, 2018.

Intel stocks are not affected by Apple Silicon

When the news started floating around that Apple Silicon was planning to start using its own Mac chips, Intel investors remained unperturbed. Immediately afterward, a lot was said of Intel losing significant business.

However, it had been known for a while that Apple was working on its own Mac chips. On the day the rumored split was made, Intel’s shares went down by 1%, and Apple shares went up by 3.2%.

Also, analysts (New Street) pointed out that Intel is responsible for 72% growth of everything made from cloud computing, which rose to15 billion dollars in 2019. They also put a target price of Intel stock at $90. With the current price of Intel stock being 63 dollars, that is 43% higher.

The effects of the pandemic

There are several factors to be considered when looking at how Apple Silicon has affected Intel Stocks. Generally, Intel has had a tough 2020. Intel stock was okay at the beginning of 2020. But when the effects of the pandemic started kicking in, it also went down.

Intel stock did not do well in the last two quarters, according to its reports.

In 2019, Intel came out number one in the revenue it generated as a chipmaker. Its market share was higher than that of Samsung that came second. The chip revenue dropped by 0.7% year-over-year, at $65.8 billion. Before then, in 2017 and 2018, Samsung held the first position. The semiconductor revenue declined globally by 11.9% in 2019 to $418.3 billion.

Apple Silicon could influence the industry out of Intel chips

That is another fact, that if actualized, could bring Intel stock further down. Jean-Louis Gasee, a previous Apple executive, had a lot to say about this. Because of Apple Silicon coming into the market, Microsoft may have to create better hardware based on ARM, making a better distinct ARM for Windows.

Besides, Apple’s innovation will cause the PC industry to deviate from using Intel chips. Apple’s change into the full use of its own Apple Silicon is a process that will take two years to fully realize, as they grow out of Macs created by Intel. This move will likely affect Microsoft, Apple’s primary contender in software.

The feeling is that the change Apple has done will be felt by the industry and Intel, despite the company not being a dominant part of the PC market. Having invested billions of dollars in Apple Silicon, the company hoped to improve on Mac.

Former Apple’s executive says she can’t imagine a less than 25% throughput being provided by Apple Silicon Macs against the x86 PCs. She believes that to have been why billions of dollars were spent on its creation.

Intel delays in providing chips

Intel stocks went down when they delayed in producing chips. Those who had invested in Intel stock sold them off. The week following the news saw its stock going down by 21%.

Because of this, Intel fell behind Taiwan Semiconductor Manufacturing (TSM). Advanced Micro Devices (AMD), Intel’s rival, is almost at the same level as TSM is looking to dominate the market share in servers and processors for PCs.

Intel is contemplating outsourcing the production of its chips to probably Taiwan Semiconductor.

What Apple Silicon means for Intel’s stock.

As Intel faced its delays, Apple announced the move to its own Mac computer chips on June 22. The chips will be made by Taiwan Semiconductor, using Apple’s designs.

That has added to the many challenges that Intel stock is facing in the industry. Combined with the company’s internal struggles, it leaves Intel stock at a disadvantage.

Apple had various reasons for leaving. They wanted all their devices to work harmoniously. They also aimed to raise their profits and better market share by sharing their savings with their customers by reducing the cost of Mac.

The company was probably fed up with putting up with the cancellations and delays of the Cannon Lake processor. According to Intel’s former engineer, Francois Piednoel, Apple got frustrated by bugs.

Apple pointed out that they wanted to make a wholesome approach to dealing with all their products. With the move, they hoped to make the process of developing and optimizing the apps for all their products easier.

Besides, Apple Silicon has advanced capabilities. They believe its performance places it ahead in the industry. They also made it possible for developers to avail of iPadOS and iOS apps on the Mac without modifying anything.

Hopefully, the industry will also experience high-performing GPUs and per watt leading performance. Apple hopes that high-end games and pro apps are now a possibility. Neural Engine technologies will now be accessible to the developers, making the Mac a great machine learning platform.

The company feels that they are experiencing the most growth with their mobile devices having chips designed by them. That is the same reason they had moved to Intel fifteen years ago because back then, Intel was at its highest peak performance. It enjoyed support from Windows, who invested in it, and PowerPC could not keep up.

When Apple showed the performance of Mac computers, the speed was observed to be 3.5 faster with M1 chip than with Macs from Intel. The GPU performance is said to be accelerated to speeds six times higher.

The battery life extends two times longer. Further, functions that could only be on many separate chips, are now incorporated in the M1 chip.

Apple Silicon negative impact on Intel stock

Some of the reasons behind the making of Apple Silicon are the same reasons that have heavily impacted Intel stock. Therefore, even though the actual move is said to have not significantly affected Intel stock, Intel’s shortcomings, combined with the introduction of the M1 chip to the market, have negatively impacted Intel stock.

The matter is made worse by the effects of the ongoing pandemic on the industry in general.

Intel’s way forward

The Chief Executive of Intel, Bob Swan, seems to be directing the company to take up 30% of the semiconductor market. He views this as better than trying to maintain 90 percent of the CPUs/central processing units market.

According to an announcement made on October 20, the company is selling its Nand memory-chip unit at 9 billion dollars. The buyer is SK Hynix, a supplier of memory semiconductors in South Korea.

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