ARM Twisting: Intel to Fab Chips for Apple?

Intel’s hunt for new foundry business may well end in a deal with Apple to fab the company’s “A” series chips. That’s the word on the street, anyway, most recently codified by Citigroup analyst Glen Yeung, who says the supply chain chatter he’s hearing suggests a foundry partnership between the two companies may be in the offing.

“We believe a foundry relationship may be forming between Intel and Apple,” Yeung says. “Our discussions with the hardware supply chain tend to support this belief. Intel has previously acknowledged they would be amenable to such a relationship, under the right conditions.”

Among those conditions, says Yeung: An agreement from Apple to someday convert from an ARM-based core for handsets and tablets to x86, which would essentially give Intel Apple’s chip business. That would obviously be a huge win for Intel, as it stands to gain much from Apple’s market share in smartphones and tablets.

But there is one problem. Apple’s A4 and A5 chips are based on an ARM design and Intel isn’t exactly a big fan of ARM. Asked during Intel’s recent investor meeting if the company would consider fabbing chips based on the ARM architecture, CEO Paul Otellini had this to say: “The short answer is ‘No.'”

A foundry partnership with Apple would require a rethinking of that answer, at least for the short term. And Intel certainly could do it. It has the necessary ARM licenses. It just needs to convince Apple to dump Samsung, which currently handles chip fabrication for it, and migrate its mobile devices over to its forthcoming low-power x86-based chips next year.