How Much Revenue And Earnings Could Intel Stand To Lose If Apple Deploys Its Own Chips For Mac?
Apple Inc. will likely ship Mac computers with its own ARM-based chips from 2020. This could result in $3 billion loss of revenue and a 5% decline in earnings for Intel (NASDAQ:INTC), according to our estimates. We have created an interactive dashboard ~ How Much Revenue And EPS Could Intel Stand To Lose If Apple Deploys Its Own Chips For Mac ~ that shows our estimates and assumptions. You can modify our assumptions to see the impact Apple’s own chips would have on Intel’s earnings.
Apple Inc. could launch the first Macs powered by its own ARM processors as early as 2020-2021. The Macs currently use Intel chips, and it will have a limited impact on Intel’s top and bottom line. Apple sold 18.2 million Macs in 2018. Assuming an average price point of $180 for each processor chip, Intel will likely lose $3.3 billion or roughly 5% of its revenues. To understand the impact on earnings, we use an adjusted net income margin of a little under 30%, assuming Intel’s overall adjusted net income margins are similar to the margins for Mac chips, and the share count of roughly 4.6 billion. We thus arrive at $0.21 figure for Mac’s contribution to Intel’s earnings per share, which is a roughly 5% potential loss of earnings for Intel.
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This 5% figure suggests that the risk exposure is not particularly high for Intel. In addition, this figure could further shrink over time because of stagnation in the PC market, and the growth expected in other segments in which Intel operates. In fact for Intel, the real problem currently is the market share loss to AMD, especially in the data center market. AMD has been on a strong run in the recent quarters, gaining market share, given the high demand for its Ryzen and EPYC products. Accordingly, Intel should worry more about how to maintain its dominance in the data center market.
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