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123webguru News Desk
Apple may use Intel chips for Macs
Recasts second paragraph, updates with closing stock prices of Apple and Intel
By Duncan Martell
SAN FRANCISCO (Reuters) - Apple Computer Inc. (AAPL.O: Quote, Profile, Research) has been in talks that could lead to it using Intel Corp. (INTC.O: Quote, Profile, Research) chips in its Macintosh computers, The Wall Street Journal reported on Monday, reigniting decade-old speculation and sparking a 5 percent rise in Apple's stock price.
The report, which cited two industry executives with knowledge of recent discussions between the companies and prompted skepticism from some analysts, said Apple was expected to agree to use Intel chips. But it said the talks could break down or could be a tactic to gain negotiating leverage with Apple's current chip supplier, International Business Machines Corp._(IBM.N: Quote, Profile, Research) .
At stake for Apple is a more predictable and consistent supply of microprocessors -- the computing engines in computers -- as well as potentially lower prices for Apple Macintosh computers, which historically have cost more than PCs running Microsoft Corp.'s (MSFT.O: Quote, Profile, Research) Windows operating systems.
Intel spokesman Chuck Mulloy and Apple spokesman Steve Dowling declined to comment on the report, which they termed "rumor and speculation."
Some analysts on Monday doubted Apple would soon drop IBM's PowerPC processor for Intel's Pentium chips, which power more than 80 percent of the world's personal computers, noting the momentous task of porting, or rewriting, Apple's OS X operating system, as well as all the software programs that run on PowerPC chips to Intel's.
"It's just too much software to have to change," said Kevin Krewell, editor-in-chief of newsletter Microprocessor Report. "This is just putting more pressure on IBM to fix these problems."
IBM has in the past had problems in producing enough working G5 PowerPC processors for Apple's Power Mac computers and the G5 chip uses too much power, hence producing too much heat, to be used in its popular iBook and PowerBook laptops.
Though Apple has less than a 3 percent share of the PC market, its embrace of Intel chips would mark a fundamental change to the computer industry's historic alliances and rivalries. Apple has long blazed its own path by avoiding chips from Intel or rival processor maker Advanced Micro Devices Inc. (AMD.N: Quote, Profile, Research) , which together power nearly all the world's PCs.
"It's like Ferrari going to BMW for an engine," said Richard Doherty, the research director for technology consulting and research firm Envisioneering. "This is seen as a whole changing of church."
Tim Bajarin, an analyst at Creative Strategies, referring to Intel chips said: "To port to an x86 platform would be a massive undertaking and I'm highly suspicious of that."
Apple always has a lot of projects in the works and could be evaluating Intel chips for use in future products, Bajarin said, adding that when Apple co-founder and chief executive Steve Jobs was asked Sunday night at a Wall Street Journal technology conference whether Apple would use Intel chips, "Jobs basically said no."
"He said 'we've had talks with Intel' and that's about it," Bajarin added.
Apple shares closed up $2.21, or 5.9 percent, at $39.76, while Intel shares rose 15 cents to close at $26.50.
Analyst Rob Enderle of the Enderle Group said any such transition to Intel chips would not be easy for Apple.
"Apple has put so much behind the PowerPC in terms of how much better the PowerPC is than Intel's processors," Enderle said. "It is risky." (Additional reporting by Daniel Sorid in San Francisco and Bill Berkrot in New York)
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