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How will affect to Intel the loss of a customer like Apple

Apple’s announcement that it is finally designing its own chips for Mac computers was a very long time coming—and very little surprise. The company has been designing its own central processors for iPhones and iPads since 2008, and has long voiced its view that devices perform better with its own, custom-designed silicon.

The Mac’s relatively small share of the PC market limits the damage somewhat. According to IDC, Apple has averaged about 8% of global PC shipments over the past five years. UBS analyst Timothy Arcuri estimates that Apple accounts only for about 2% to 3% of Intel’s annual revenue, and that won’t be going away immediately. Apple said Monday that it still has Intel-based Macs “in the pipeline,” and that the full transition will take about two years. And note that Mac revenue grew only 2% in Apple’s most recent fiscal year after falling nearly 2% the previous year.

But the move will further weaken Intel’s PC-related business, which is already constrained by the mature industry’s relatively anemic growth prospects. And if Apple ultimately succeeds in fielding new Macs that match or exceed the performance of Intel-based versions, it could hurt Intel’s hold even further. The chip maker has a dominant share of the PC-and-server-processor market because its x86 chip architecture is still widely considered superior in performance over the competing ARM-based architecture common in mobile devices such as smartphones and tablets.

That, in turn, could spur more companies to follow Apple’s lead. Intel’s best defense in that scenario is that very few have the resources to do so. Apple’s research-and-development expenditures now total about $17.4 billion a year—more than double the combined annual outlay of Lenovo, HP and Dell Technologies, which account for the majority of PC sales. And developing PC and server processors is no simple affair. Even with all its financial might, it has taken Apple a decade from the launch of its first internal chip for the iPhone to develop a PC processor it is comfortable taking into the market.

But tech giants such as Google and Amazon have the scale to match Apple’s R&D efforts and the time to do so. Both already have developed their own chips for use in distinct areas of their data centers—a vital market for Intel where it is also facing growing competition from Advanced Micro Devices. Intel can afford to be outside the Mac, as long as it stays well inside the cloud.

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