Yahoo Finance’s Daniel Howley joins the Live show to break down Apple’s move to make its own chips and screens.
Video Transcript
JARED BLIKRE: Apple has bombarded consumers with plans to shift its supply chain, decreasing its reliance on external producers and moving to make its chips and screens instead. For more on this shift to design components in-house, we’re going to get to Yahoo Finance’s technology editor Dan Howley. Dan, spill the details, please.
DAN HOWLEY: Hey, Jared. That’s right. Apple is essentially making some big changes inside and outside of its devices. And we’ll start with what the announcement that they provided us with yesterday. There are two new chips. They have their M2 processor, and now they have their M2 Pro and their M2 Macs. These are going into the MacBook Pro and Mac Mini. So this is part of the strategy that they’re kind of playing out overall where they’re pulling away from these third party partners and pushing everything in-house.
Now, it’s important to note that they’re not building these chips. They’re still using partners like TSMC, Taiwan Semiconductor, but they are designing them. So rather than relying on the likes of Intel, which they’ve stopped their relationship with– they’re doing this on their own– this goes beyond just the processors inside their devices, whether it’s their iPhone, their iPad or Mac. It also goes into the modems in their devices. We know that they’re going to be weaning themselves off of their reliance on Qualcomm for their 5G chips.
That was supposed to happen this year, but because of some technical difficulties that they ran into, they’re going to continue to rely on them at least for now. And then next year, they should be going with their own chips. And they’re also reportedly trying to wean themselves off of Broadcom, which provides the Wi-Fi and Bluetooth chips in iPhones. They’ll be stopping those in the near future and building their own dual chip, and then eventually, a three-piece chip with their modem, their Wi-Fi, and their Bluetooth.
So what does this all mean? Well, it does mean that Apple can provide newer devices faster and under their own desires. So design is no longer going to be limited to what producers of these products mandate. Apple’s going to be working on its own displays, according to a report from Bloomberg. They’ll be able to then manipulate those to provide better devices. And we’re seeing that now with some of their laptops and desktops, where normally, with the MacBook Pro, we would see it languish for years without getting any kind of update as far as chips.
Now we’re seeing updates on a regular cadence because Apple is able to do this. That allows them to say that they are updating quicker, that they’re more desirable than you would see from a competing Windows device. And so that can help them draw market share. And I just want to point out what their market share sits at right now. They own about 10.7% of the global market. They’re still well below the likes of Dell, which is at 16.7%, HP at 20.2%, and Lenovo at 24%. So they still have a long ways to go as far as making up that market.
But if they can do this, they should be able to start collecting a little bit more of that. And we also actually have Loup Ventures’ Gene Munster kind of basically saying the same thing, saying that the benefits of their speed at Apple will provide them this kind of incentive for consumers for decades to come. So this is all part of their big push to bring, everything internally, and then give the benefits to consumers. That should help their bottom line.
BRAD SMITH: So, Dan, I’m going to bring you and I’s elevator talk here to the screen for our viewers. What part of the phone that Apple doesn’t yet make or does not or has not announced intentions to begin manufacturing and bringing into this vertical integration, what part of the phone don’t they do that they could later seek out perhaps bringing in-house?
DAN HOWLEY: Yeah, right now, it’s the big thing is the screen, right? So when it comes to smartphone design, a lot of it is dictated by, obviously, the screen because people want their screens to be bigger now, and the battery. The battery needs to be large enough to provide a charge. Apple could theoretically build a battery on its own and go ahead and help kind of use that to change the look and feel of the iPhone to what they want. And with the display, they’d be able to present a better-looking iPhone overall, especially if they move to this micro LED, which is apparently what they’re supposed to be doing.
One report says that on the Apple Watch, it looks like the words kind of float on the glass, rather than being underneath it. So it would be a significant change to the iPhone. And we’ve seen them try to make changes as of late. There’s nothing been really groundbreaking. There’s the dynamic island, which is interesting, but doesn’t really do much outside of allow you to access your music from your home screen without having to go into an app or a timer. The camera’s obviously always getting an upgrade. Sony generally produces the chips for that. Apple could work on those on its own and see if maybe they could change up the iPhone there.
But there haven’t really been, as I said, these kind of groundbreaking movements in the iPhone. If, though, they’re able to do that with the display, if they’re able maybe to change things with the battery, they’ll be able to provide a completely different experience. But we’ll have to wait and see. Don’t take that to mean folding phones. That’s not going to happen.
JARED BLIKRE: [LAUGHS] No imitation there. All right, thank you for that, Dan Howley.
