Since Donald Trump allowed Apple (US:AAPL) to repatriate $38bn (£27bn) of its profits which had previously been stuck overseas, investors have been questioning what the world’s biggest public company will do with all its free cash. The answer, it seems, is invest in its own hardware capabilities. According to various media reports, Apple is looking to use its own chips in its Mac laptops as soon as 2020, replacing the processors made by US peer Intel (US:INTC).
The initiative is reported to be part of a wider strategy that will eventually see Apple bring more of its hardware components – including the chips in the iPhones and iPads – in-house. The project is intended to make all the group’s devices and software work together more seamlessly and reduce Apple’s reliance on other companies' tech development.
It’s a nerve-wracking time for Apple’s suppliers including Intel, whose share price dropped as much as 9 per cent on the day the news was leaked to the press. But Intel – which generates an estimated 4 per cent of its revenues and 1 per cent of its profits from contracts with Apple – probably won’t be too badly affected by the loss of this one contract. That said, the hardware group’s investors should probably be wary if more tech groups follow Apple’s lead and bring their chip making in-house.
