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Research Details

Apple's Custom Chips: A Genius Decision?

Abstract

When Steve Jobs co-founded Apple in 1976, his philosophy was to move fast, unencumbered by norms, and take risks in search of greater rewards. His strategy was to differentiate Apple by developing high-end products that consumers craved. "Innovation distinguishes between a leader and a follower," Jobs said.

In 2008, Apple-watchers noticed the company was hiring "chip guys" and wondered why the company needed the expensive, highly-skilled engineers who designed silicon microprocessors, the heart of computing devices. Their questions were answered when the iPad and iPhone 4 were launched in 2010 with the A4, a custom "system on a chip" (SoC) designed by Apple. Previous generations of iPhones and iPads has used non-customized Samsung chips. Samsung had angered Apple when, in 2009, it introduced a smartphone resembling the iPhone that used the same chips.

When Tim Cook became Apple CEO in 2011, he extended Jobs's pioneering vision with what came to be known as the "Cook Doctrine": that Apple had a "long-term strategy of owning and controlling the primary technologies behind the products we make." In June 2020, in an echo of its decision a decade earlier to design its own mobile-device chip, Apple announced that it would begin designing the microprocessors inside its new Mac computers and end its 15-year partnership with Intel. "When we look ahead, we envision some amazing new products, and transitioning to our own custom silicon is what will enable us to bring them to life," Cook said at a conference that month.

Type

Case

Author(s)

Meghan Busse, Susan Springer

Date Published

11/10/2021

Discipline

Strategy

Citations

Busse, Meghan, and Susan Springer. Apple's Custom Chips: A Genius Decision?. Case 5-421-752.

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