The > Technology > Apple Plans to Switch From I.B.M. to Intel Chips

Correction Appended

SAN FRANCISCO, June 5 - Steven P. Jobs is preparing to take an unprecedented gamble by abandoning Apple Computer's 14-year commitment to chips developed by I.B.M. and Motorola in favor of Intel processors for his Macintosh computers, industry executives informed of the decision said Sunday.

The move is a chesslike gambit in a broader industry turf war that pits the traditional personal computer industry against an emerging world of consumer electronics focused on the digital home.

"This is a seismic shift in the world of personal computing and consumer electronics," said Richard Doherty, president of the Envisioneering Group, a Seaford, N.Y., computer and consumer electronics industry consulting firm. "It is bound to rock the industry, but it will also be a phenomenal engineering challenge for Apple."

Mr. Jobs is expected to announce the transition to Intel chips at Apple's annual developer conference, which will begin here Monday. Apple's intention to shift to Intel chips beginning in 2006 was reported Friday by CNET News.com, a technology news service. The Wall Street Journal had previously reported that Apple and I.B.M. were negotiating.

Apple, according to analysts, has become increasingly alarmed by I.B.M.'s failure to deliver a new version of its Power PC chip, called the G5, that does not generate much heat - a crucial feature for notebook computers, which do not have as much room for fans and ventilation as desktop machines.

Apple's notebooks now use the older G4 chips, made by Freescale Semiconductor, which was spun off from Motorola last year.

"That's a huge looming problem for Apple, if it can't keep up with Intel notebooks in performance," said Charles Wolf, an analyst for Needham & Company. "And that's been an I.B.M. problem. I.B.M. hasn't delivered a cool-running G5."

Apple, I.B.M. and Intel spokesmen all refused to comment this weekend on the possible shift in alliances.

The first move in the complex industry realignment now taking place was made more than a year ago when Microsoft broke with Intel and said that it would use an I.B.M. processor chip, similar to the one used by Apple for its Macintoshes, in the second version of its Xbox video game machine.

What Microsoft has made clear recently is that the new Xbox, to be called the 360, will be much more than a video game player when it reaches store shelves this fall. It will perform a range of home entertainment functions, like connecting to the Internet, playing DVD movies and displaying high-definition television shows as well as serving as a wireless data hub for the home.

Microsoft's decision to build its own computer hardware, with help from I.B.M., was a direct assault on a market that Intel was counting on for future growth. It is likely that Intel forged the alliance with Apple in an effort to counter the powerful home entertainment and game systems coming from Microsoft and Sony.

While the new partnership is a clear and long-coveted win for Intel, the world's largest chip maker, it portends a potentially troublesome shift for Apple, the iconoclastic maker of sleek personal computers and consumer electronics gadgets.

Apple was the largest maker of personal computers in the early and mid-1980's, but its share of the worldwide computer market fell steadily during the past two decades as the Windows-Intel alliance emerged as an overwhelming personal computing standard.

That decline came despite Apple's earlier shift from Motorola microprocessor chips to the PowerPC processor, the fruit of a grand alliance that Apple entered into in 1991 with Motorola and I.B.M.

Originally intended to counter Microsoft and Intel, the alliance was never able to stop the erosion of Apple's market share, as Apple customers were forced to upgrade their hardware and software to take advantage of the newer processor chip.

Mr. Jobs, who left Apple in 1985 to found Next Inc., went through a similar transition when he moved his NextStep operating system from Motorola chips to Intel's x86 processors. When Mr. Jobs sold Next to Apple in 1997 and then returned to the company to lead its resurgence, he moved the operating system to the PowerPC. But it has been widely reported that the company has kept alive a small development project called Marklar that has developed an Intel-compatible version of the Macintosh operating system.

For I.B.M., the end of the Apple partnership means the loss of a prestigious customer, but not one that is any longer very important to I.B.M.'s sales or profits. It further underlines how much I.B.M. and its strategy in recent years have moved away from the personal computer industry that it helped create. Last month, I.B.M. completed the sale of its personal computer business to Lenovo of China.

Even as a chip maker, I.B.M. has moved aggressively beyond the PC industry, focusing on making the processors for video game consoles from Nintendo, Microsoft and Sony, and specialized chips for other uses, like the Internet router computers made by Cisco Systems and cellphone technology by Qualcomm. I.B.M. also uses its Power microprocessors in many of its own server computers, which run corporate networks.

By contrast, the chips I.B.M. makes for Apple represent less than 2 percent of chip production at its largest factory in East Fishkill, N.Y. And while the microelectronics business as a whole is strategically important for I.B.M., it is a small part of the revenue of a company that increasingly focuses on services and software. A. M. Sacconaghi, an analyst for Sanford C. Bernstein & Company, estimates that the company's technology group - mostly microelectronics - will account for less than 3 percent of I.B.M.'s revenues and 2 percent of its pretax income this year.

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