The news of Apple‘s ( AAPL 2.09% ) latest development could cause considerable industry disruption. In this clip from “The Virtual Opportunities Show” on Motley Fool Live, recorded on March 15, Motley Fool contributor Travis Hoium discusses Apple’s announcement of its new M1 Ultra Chip and analyzes how it presents another differentiator for the tech company.
Travis Hoium: Last week, Apple announced their new M1 Ultra Chip. If you watched the presentation, it gets complicated in exactly what they’re doing but, basically, they’re putting two chips with numerous systems on a chip together to make one giant chip. Apple, over the last decade, has gone from buying most of its chips off the shelf to being a massive designer itself. Now, it uses primarily TSMC, Taiwan Semiconductor ( TSM 0.22% ), to produce its chips and they’re actually driving the leading edge technology for TSMC. They will basically pay upfront or contract with them to be the preferred customer for these leading edge chips. Really, Apple, in a way, has better chips than anybody else because they’re such a big buyer. Then, add that to the fact that they’re integrating their hardware and their software and you have a really powerful competitive advantage from that ecosystem. What’s interesting with the M1 Ultra is Apple has, for a long time been behind, specifically Nvidia ( NVDA 6.81% ), with the graphics card market. If you’re a gamer, you’re going to typically buy a PC because you can get RTX 3080 or whatever. In the past, there’s been different chips, but you would always want to have an Nvidia graphics card if you were getting into gaming or VR or something like that. The interesting thing with the M1 Ultra is, according to early reports and we’ll see as this product comes out and we get actual testing from third parties, this is supposed to be competitive from a graphics standpoint with the RTX 3080 and 3090, which is Nvidia’s leading consumer graphics card. If Apple can get to the point where they have a graphics chip set that competes or, maybe is even better over time from a graphical standpoint than Nvidia, that really changes the market. I don’t think that means that Apple is going to be the go-to gaming PC in the next couple of years, but we could see, over time, them start to eat away market share. I think this is a really big move for them, making the MacBook and then also this new Mac Studio desktop much more competitive for these high-end users. I think that’s a really interesting development. It maybe isn’t getting a lot of press because it’s in the weeds of the semiconductors, but as we do more of these things like the metaverse and we’re using AR and VR and doing more Zoom ( ZM 4.48% ) calls, this is a really important tech that they’re putting out there. I think this could be another differentiator for them as a company, just another reason to be bullish on Apple stock.
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