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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Edward Boghosian who wrote (173940)	9/9/2014 9:29:20 PM
From: neolib	4 Recommendations Recommended By dhellman Doren Road Walker slacker711 Read Replies (2) \| Respond to of 213177

A simpler way to say things might have been this: Apple makes the bulk of its profit (and they are large profits!) off of smartphones and tablets, a market segment which has negatively impacted traditional computing (PCs). Intel initially dismissed this market as not being real computing. In the old PC computing world, Intel and Microsoft made the vast bulk of the profits, and all their partners lived on razor thin margins, often in the single digit range. Intel now understands the threat from mobile, and would dearly love to turn that sector into the familiar business model they had in PCs: Near monopoly, where they get the bulk of the profits. In the PC sector, Intel accomplished this by two main mechanisms: 1) Design monopoly on x86 instruction set, and 2) by always being a step ahead in semiconductor process technology, i.e. they could build smaller and faster circuits, hence higher performance and cheaper to make. In the mobile space, 1) is gone, because of ARM, so all they have is 2). Thus it is VERY important for Apple, to make sure that their chip manufacturing partners, don't find themselves too far behind Intel, or Intel will eventually place the mobile industry back in the same lock they had on PCs: Their chips will be higher in performance, and they will have a cost advantage such that Intel can drive everyone else out of biz, and then suck monopoly prices out of all the smartphone/tablet OEMs who will have razor thin margins again. Currently Intel is trying to buy their way into mobile, by wrapping each of their chips in a $20 bill. This is causing $1B/qtr in losses for the mobile segment of Intel. This strategy looks like it might boost Intel to the #3 slot in tablet processors in 2014. They will try to attack phones in 2015, likely with a similar strategy. Intel as been loudly asserting for some time now (about a year) that they are pulling ahead of the Foundries in process technology, when the evidence is the opposite: The Foundries are instead closing the gap with Intel. The data from today on the A8 is another dot in that line of evidence. The chart below was what Intel has been claiming. It was shown last Nov. This was the first time that Intel admitted that their 22nm was about the same as the Foundries 28nm for density. But then Intel claimed they would pull way ahead at 14nm. Instead, what we see is that TSMC is likely as dense at 20nm as Intel is at 14nm, and since TSMC will pick up about 10% in going from 20nm to 14nm, they will pull even a bit more ahead of Intel.