Intel misjudged how much the part would cost to make. That mistake led to a huge missed opportunity.
> Even Otellini betrayed a profound sense of disappointment over a decision he made about a then-unreleased product that became the iPhone. Shortly after winning Apple's Mac business, he decided against doing what it took to be the chip in Apple's paradigm-shifting product.
"We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we'd done it...
At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it...
And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought."
> Intel misjudged how much the part would cost to make
I just don't buy it. If Intel realized in hindsight that they could price out a competitive chip, why didn't they sell it to Android manufacturers? So much effort goes into making us lament a world where Intel iPhones existed, but I don't even see the appeal. Intel didn't have a vested interest in ARM (an attitude persisting to this day), they weren't going to acquiesce to Apple's desired margins then or now, and Apple would always have the logical opportunity to cut out their chip middleman. It's about as appealing as a shit sundae sat on a trap door.
> That mistake led to a huge missed opportunity.
Again, was it really that huge? After licensing cost to ARM, core design fees and the bulk deals worked out, I can't see Apple allowing Intel room to breathe. From a certain perspective, it almost seems like Intel never had any desire to genuflect for Apple and only signed the Mac deals to proliferate their existing design catalog. I can't say for sure what the financials worked out to be, but considering Mac market share at the time it makes sense why Intel wasn't super motivated. If we could look at a modern iPhone bill-of-materials, I don't think either of us would feel bad for Intel.
Arguably, TSMC being Apple's preferred fabricator is why it has a current market cap 10x larger than Intel.
Apple probably ends up getting chips only slightly above cost from TSMC. (It pays $18 B a year, which is pretty low for the CPUs in roughly 400 million phones, watches, tablets, Macs, AppleTV, etc. it sells every year) but it also pays well in advance the costs for building the fabs for those chips. This gave TSMC the scale needed to be the world's leading semiconductor manufacturer, which means it simultaneously has lower costs from economies of scale, as well as more pricing power, from being able to offer leading edge nodes first.
Sure, but also let's not pretend like Apple would pay the same amount for 14nm++++. Even if TSMC didn't exist, Samsung could have beaten Intel on a density roadmap. The looming possibility (if not inevitability) of Apple designing in-house was casting a shadow even then, and today it only makes less-and-less sense mourning the separation of both companies. They wanted different things, and Intel didn't have to rely on TSMC-level density to make their case.
It's not like the Core products that went into Macs - making iPhone chips is a bespoke, ground-up production. It barely makes sense for Apple to insist on using Intel fabs unless they're heavily insecure about outsourcing their supply chain. It makes absolutely no sense at all for Intel to design ARM chips when they don't own an architecture license and would ostensibly only purchase one to make Apple happy. Again, I feel like this entire "lament" is manufactured by Apple fans eager to rewrite history with Apple making generous offers to domestic American businesses. In reality, Apple's endless desire for hardware margins drove them to dictator-states and third-world manufacturing hubs to meet their quota. It's okay for us to pragmatically admit Apple never had any business with Intel, and Intel was right not to convince them otherwise.
If Apple went with Intel from the beginning I doubt they would have ended up developing their own chips and they'd probably be just stuck with x86 on Mac XSScale/whatever on mobile.
> ARM chips when they don't own an architecture license and would ostensibly only purchase one to make Apple happy
They did certainly own one. XScale was a custom core and not licensed from ARM. IIRC pretty much all high-end PDAs used them so it would have been the default/safe choice for Apple had Intel decided not to abandon it.
Is there any information about those terms? Could they really have been worse than whatever deal with Apple has with ARM these days?
The main downside with ARM/XScale is that Intel would be forced to compete with all other manufacturers and wouldn't have been able to charge their monopolistic/oligopolistic margins on their products. Of course Intel being Intel they could have just added enough proprietary extensions to solve that.
> Apple's endless desire for hardware margins drove them to dictator-states and third-world manufacturing hubs to meet their quota
Sure. But Apple wasn't really in a position to do that back in 2005-2007. It took years for them to build that because they could do it iteratively, I doubt Intel would have allowed them as much freedom as Samsung though.
>I don't think either of us would feel bad for Intel.
Except TSMC? It is not like Intel wont have its margin in making a chip for Apple. It will just be much smaller margin, or margins of modern day Fabless Soc Design company. The problem is Intel misjudged the volume, which ultimately meant they also miscalculated the whole OPex and Capex equation. And Intel dont want to do low margin business ( by their standards ).
Most of your statement suggest Intel would have to make a loss in working in Apple. And yet TSMC has been enjoying their ride purely because of Apple.
TSMC doesn't have to pay ARM licensing costs or design chips for Apple. Their relationship is markedly different from what people are suggesting here, and is profitable because they more or less require Apple to make upfront investments to reserve upcoming nodes.
Intel's margins made sense when they were selling pre-designed x86 CPUs for use in Macs. It expressly does not make sense when a company notorious for loving low margins asks you to design and manufacture a chip you won't be legally allowed to use anywhere else. Again - Intel was absolutely correct to recognize Apple's attempt to cuck them here.
Intel already had an ARM license they had used to create their XScale line.
They decided to sell that line of business off to Broadcom instead of fabbing a chip for Apple.
Later they decided their failure to enter the mobile device market was a big enough error that they burned through about a billion dollars in a failed attempt to push x86 as a viable alternative to ARM for mobile devices.
Pretty much all PDA's (even devices like the first gen Kindle) were using Intel's ARM chips. There is no reasons to believe that whatever Apple needed would somehow have been extremely different from what their other clients used (and it's not like Apple had that much bargaining power those days anyway).
> Intel was absolutely correct to recognize Apple's attempt to cuck them here.
I see it the other way around. Unless Intel somehow severely fucked it up (not a distinct possibility, just Intel being Intel) Apple would probably be stuck with their chips both on mobile and laptop/desktop to this day.
>
I just don't buy it. If Intel realized in hindsight that they could price out a competitive chip, why didn't they sell it to Android manufacturers?
Intel later attempted to bring x86 SoCs to (Android) smartphones (for example the ASUS ZenFone 2 was x86-based), but at that time Arm processors were already quite established in the Android ecosystem, so this attempt was a commercial failure.
Which really further proves Intel's point - they don't want to design phone chips. They wanted to (and did) ape off old nodes for nearly a decade, sat on the same designs and never really competed for the mobile market. There wasn't a world where Intel pays for an ARM architecture license, designs Apple's cores, and then gets cheated out of a fair price in the dealmaking room. It's not worth it for them, had Intel signed onto such an agreement they'd only be guaranteed to cuck themselves in the future.
We can argue for or against Intel acquiring an ARM license in an alternate reality, but truth is they don't care. Apple wanted to turn them into something that would never work, and even if they got what they wanted, Apple's current supply-chain squeeze would have obviated any chance of Intel sticking around.
> There wasn't a world where Intel pays for an ARM architecture license, designs Apple's cores,
They had an ARM license and they had their own high-end cores that pretty much all PDAs used. In the early 2000s if you wanted a high-end ARM chip Intel was the default choice.
> We can argue for or against Intel acquiring an ARM license in an alternate reality, but truth is they don't care
Well as I said they already had one in our reality and could have easily ended up in the position Qualcomm is now if they played their cards right (well realistically in a better position because Qualcomm historically struggled keeping up with their own core designs and ended up switching to Cortex while Intel had a significant head start).
You're quoting all the stuff TFA tries to debunk. Intel simply didn't have anything to offer at that point. XScale already lost edge and about to be sold, a matching x86 chip not on the horizon yet.
Intel was perfectly capable of fabbing the ARM chip Apple wanted.
They just screwed up the cost to manufacture estimate which led them to make a bad call.
That's straight out of their CEO's mouth in an interview, so there isn't anything to "debunk".
Later, they would attempt to correct the error by selling x86 chips way below cost in a failed effort to break into the mobile device market.
> In order to make these platforms viable for the low-end and mid-range of the tablet market, Intel provided system vendors with "contra-revenue" subsidies. These platforms simply required an expensive set of surrounding components to work, so Intel "made up the difference," so to speak, to customers who used its platforms with subsidies.
This program likely cost Intel, and its stockholders, in excess of a billion dollars.
> Even Otellini betrayed a profound sense of disappointment over a decision he made about a then-unreleased product that became the iPhone. Shortly after winning Apple's Mac business, he decided against doing what it took to be the chip in Apple's paradigm-shifting product.
"We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we'd done it...
At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it...
And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought."
https://archive.ph/B0Bbs