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Coming to an iPad Near You Soon… Intel’s Game-Changing New Chip

Like two unruly kids scrapping in the schoolyard, the patent brawl between Apple (Nasdaq: AAPL) and Samsung is getting petty.

On April 27, we noted that Apple is suing Samsung over a laundry list of alleged patent infringements. Apple’s lawsuit focuses mainly on alleged design similarities between Samsung’s Galaxy lineup and the iPhone and iPad.

Samsung didn’t waste much time before firing back with a “stop copying me” lawsuit of its own. It claims that Apple is infringing on 10 of its patents, including the ability for mobile phones to automatically update the time when you travel between different time zones.

There’s a word for this kind of bickering: Booooring!

At the moment, while it doesn’t seem like much more than a shoving match, it could have a deeper impact than most expect. And one company could slip in and take advantage…

Apple and Intel: The New Power Couple?

You wouldn’t know it from the current legal jostling, but Apple and Samsung have actually enjoyed a pretty good relationship, with Apple relying on Samsung’s processor chips to power its mobile products.

But the legal dispute and Samsung’s loss of Apple’s mobile business could send Apple in the arms of another chip-builder – Intel (Nasdaq: INTC).

As Piper Jaffray analyst, Gus Richard, said last Monday, “We believe Apple is shifting away from Samsung. Intel is also vying for Apple’s foundry business.”

Question is: Are the current rumors for real? I mean, as recently as March, speculation swirled that Apple was about to ditch Samsung and use Taiwan Semiconductor’s (NYSE: TSM) processor for the iPad 2.

However, The Wall Street Journal confirmed that “the relationship between the companies remains intact, despite some predictions to the contrary.”

But with the legal battle brewing, the current rumor mill is getting more action than one of those Hollywood gossip shows.

An Apple-Intel partnership does make perfect sense. Consider:

  • Intel has already proven itself by powering Microsoft’s (Nasdaq: MSFT) Windows computers. As Richard says, “A partnership between [Apple and Intel] would drive dominance in tablets similar to [Window and Intel’s] dominance in PCs.”
  • Samsung is a mutual rival and the move would represent a huge hit to its business. Especially when you consider that in 2010, Apple was Samsung’s second-biggest semiconductor customer.
  • Apple already uses Intel’s processors in its computers. The new line of iMacs announced last Tuesday run on Intel’s i5 and i7 processors.

However, other rumors suggest that Apple might oust Intel from its Mac lineup and opt for processors from ARM Holdings (Nasdaq: ARMH) instead – a move like that could ruin any chance for an Apple-Intel mobile partnership.

Here’s why that would be a huge mistake…

“Ivy Gate” Changes Everything

Last Wednesday, Intel announced a major breakthrough in microprocessor design: The world’s first 3D transistor.

Rather than morph into “tech geek” mode, I’ll put it simply: Microprocessors are basically made up of billions of transistors that act as miniature electronic switches. The more transistors you can pack into a microprocessor, the faster your computer, tablet, or smartphone can operate.

And Intel’s new 3D design now allows the company to stuff more transistors into its microprocessors than in traditional 2D chips. In fact, Intel’s new “Ivy Bridge” processor (which uses the 3D transistors) only measures 22 nanometers, but boasts twice the transistor density of the older 32-nanometer models.

As Intel says, “This transition to 3D devices will help us… Clearly, you can pack more things into a small space if you go vertical with 3D.”

Better yet, the Ivy Gate microprocessor only costs about 2% to 3% more than current flat transistors.

They use less power, too. That’s great for extending battery life and – more importantly – downgrading ARM’s capabilities. Like VLSI Research says, “It doesn’t mean that ARM is going to roll over and die. But it’s not going to have the advantage in low-power consumption like it used to.”

Of course, Intel didn’t mention exactly when we’d see the technology in smartphones and tablets. But it’s making upgrades to its factories over the next two years. And the new Ivy Gate chips could make it to mass production later this year.

So if Apple smartens up, we shouldn’t have too long to wait until we see this superior processor in iPhones and iPads.

Good investing,

Justin Fritz

Justin Fritz

, Executive Editor

View More By Justin Fritz