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How AMD Inside Apple Can Beat Intel Inside

Summary

AMD has been shunned by Apple for years due to its inferior performance.

Maintaining high margins while lowering Mac prices requires cost cutting, and when it comes to processors, Intel and Nvidia aren’t very cooperative.

AMD, given its situation, has been very cooperative, and has allowed itself to replace Nvidia in many Mac products; AMD's semi-custom business will make it even more cooperative.

AMD's technology has improved dramatically, and with a compelling new architecture arriving late next year, it could be a win-win for both Apple and AMD.

Introduction

When Steve Jobs was around, Apple's (NASDAQ:AAPL) vision was very clearly to make the greatest products in the world, almost regardless of price. This was also when the Mac was out of the reach of the average consumer, but after several price reductions over the years, the Mac has now become much more affordable for the average consumer.

Apple's continued price drops will undoubtedly entice more Mac users, but it could be at the cost of its attractive margins if it continues to use Intel (NASDAQ:INTC) and Nvidia (NASDAQ:NVDA) processors. One plausible solution is to replace Intel's x86 chips with Apple's own ARM (NASDAQ:ARMH) processors, but through a complex transition. Another solution is to replace Intel's costly x86 processors with AMD's (NASDAQ:AMD) much more affordable x86 processors; of course, this would be with AMD's late 2016 Zen product, which is a ground-up architecture that many people believe will be AMD's saving grace and a great competitor to Intel's chips.

Apple has already begun to grasp the cost-benefits that AMD has provided by replacing much of its expensive Nvidia graphics chips with AMD's just-as-effective, much more affordable graphics solutions. Such solutions include the Mac Pro, 5K iMac, and 15" MacBook Pro with Retina Display. Additionally, AMD has a very good graphics API, and the best way to utilize this API with the...


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