Apple is going to use Intel chips for its next line of MACs

Apple Computer Inc. has been in talks that could lead to a decision soon to use Intel Corp. chips in its Macintosh computer line, The Wall Street Journal reported today.

The report, citing two industry executives with knowledge of recent discussions between the companies, 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, IBM.


Intel spokesman Chuck Mulloy declined to comment. An Apple spokesman did not return a call for comment, though a spokeswoman for the computer maker characterized the Journal report as "rumor and speculation."


Adopting Intel chips would help ensure that future Macintosh systems could meet the price and performance of products from tough rivals such as Dell Inc.


Apple's pricing, which has often been higher than rivals, could become more competitive if Intel were to provide the kind of marketing subsidies it has given to other computer makers, the newspaper said.


For Intel, winning over Apple would be a prestigious endorsement from one of technology's most influential trend-setters and could associate the chipmaker with Apple's hugely popular iPod music player.


Shares of Apple rose $1.28, or 3.4%, to $38.83 in morning trade on Nasdaq, while shares of Intel fell 6 cents to $26.29.


Though Apple has only a tiny 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., which together power virtually all of 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."


Doherty, however, said some form of a partnership between the two Silicon Valley companies is all but inevitable. Intel's server chips would be well suited for some of Apple's Xserve, he said.


"I think it's a matter of time," Doherty said. "IBM has not delivered perhaps as many processors and as fast as Apple has wanted."


It was unclear whether such a move would signal a large-scale shift away from chips made by IBM, Apple's longtime supplier, the report said.


Apple could choose to add some Intel-based models to its product line or make a complete shift to Intel's chip technology in what would be seen as a serious blow to IBM's microprocessor business, the newspaper said.


Apple sells only about 3 million computers a year -- a small portion of the estimated 200 million sold globally. But the company's shares have nearly quadrupled since the iPod was introduced in October 2001.