Apple chips away at outside dependency

Updated 2017-04-06 10:01:06 Global Times

iPhone maker aims for control as it doubles down on processor design

Apple Inc has been reducing its dependence on critical outside suppliers that designed many of the core technologies, such as chip architecture, for its products. Recently, the consumer tech giant stopped licensing graphics chips from Imagination Technologies Group Plc, deciding instead to design the crucial processors in house. By reducing its reliance on outside companies, Apple aims to both maintain its immense profit margins and better position itself for future innovations.

Apple Inc's decision to stop licensing graphics chips from Imagination Technologies Group Plc is the clearest example yet of the iPhone maker's determination to take greater control of the core technologies in its products - both to guard its hefty margins and to position it for future innovations, especially in so-called augmented reality.

The strategy, analysts say, has already reduced Apple's dependence on critical outside suppliers like ARM Holdings Plc, now owned by SoftBank Group Corp. Apple once relied heavily on ARM to design the main processor for the iPhone, but it now licenses only the basic ARM architecture and designs most of the chip itself.

More recently, when Apple bought the headphone company Beats Electronics, part of a billion deal in 2014, it ripped out the existing, off-the-shelf communications chips and replaced them with its own custom-designed W1 Bluetooth chip.

“Apple clearly got rid of all the conventional suppliers and replaced about five chips with one,” said Jim Morrison, vice president of TechInsights, a firm that examines the chips inside electronics devices.

“Today we do much more in-house development of fundamental technologies than we used to,” Apple Chief Financial Officer Luca Maestri said at a February conference. “Think of the work we do on processors or sensors. We can push the envelope on innovation. We have better control over timing, over cost and over quality.”

Most vendors of consumer electronics products rely on outside suppliers for chip design and development, primarily because it is extremely expensive. That has created huge opportunities for companies like ARM, Qualcomm Inc and Nvidia Corp, which have developed core technologies for processing, communications and graphics that are used by scores of vendors.

Now, Apple is so big that it can economically create its own designs, or license small pieces of others' work and build on it. As with ARM and Qualcomm, the actual manufacturing of the chips is still contracted out to a semiconductor foundry, such as those run by Samsung Electronics.

Move fast, save money

Bringing more of the design work in-house cuts complexity, people familiar with the processes say. Instead of managing one or more design teams and then a fabricator, Apple has only to manage the fabricator.

It may also help the company move faster - and save money - as it focuses on new technologies such as virtual and augmented reality. Apple CEO Tim Cook has indicated that Apple plans to integrate augmented reality into its products, which makes 3D sensors and graphics chips like Imagination's especially important.

Even before formally cutting off Imagination, Apple had given hints that it was preparing to design its own graphics processors. Specifically, it introduced a piece of its own code called Metal for app developers.

By putting a piece of Apple-designed code between app developers and the phone's chip, Apple has made it possible to swap out the chip without interrupting how the developers work. That could also make it easier to bridge the gap for developers between the graphics chips on Apple's phones and its desktop computers.

Also in the News

Nicole Kidman Recalls Oscar Glory: Loneliest Time
Showbiz2016/06/16 13:58August 22 2017 00:07:27

Nicole Kidman Recalls Oscar Glory: Loneliest Time

Attending Shanghai International Film Festival, Nicole Kidman talks about her role in "Grace of Monaco".

Labor Day Travel Peak Starts
Also in the News2014/05/01 12:16August 22 2017 00:07:27

Labor Day Travel Peak Starts

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'
Also in the News2014/04/18 13:18August 22 2017 00:07:27

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'

Hollywood star Johnny Depp's speech in the upcoming new film "Transcendence" has been disclosed on Friday, April 11th.

Most Watched

News:
China World Business Sports Showbiz Audio
Video:
C4 My Chinese Life The Sound Stage China Revealed Showbiz Video Travel Video
Photos:
China World Fun Travel Entertainment Sports
Travel:
Beijing Shanghai Guangzhou
Lifestyle:
Live Music Opera & Classical Movies Traditional Shows Exhibitions
Learn Chinese:
Chinese Studio Living Chinese Everyday Chinese Just For Fun Chinese Culture Buzzwords