Apple Fifth Avenue store exterior

Apple is reportedly in talks with Intel to replace Samsung as the provider of processors for its iPhone, RBC Capital analyst Doug Freedman said in a recent report. "We believe Intel has the upper-hand due to the limitations of capacity at alternative sources," Freedman said, suggesting that Taiwan Semiconductor Manufacturing Company (TSMC) doesn't have the capacity to create the chips in the volume Apple needs. Several reports have suggested that Apple will switch from Samsung to TSMC for its processors.

Intel already provides Apple with CPUs for its Mac family of notebooks and desktop computers, so the partnership already exists. Freedman believes that whoever lands the contract from Apple can expect about $2 billion in revenue next year. If Intel does get tapped to make Apple's chips, Freedman believes that we'll see x86-based iPads but that Apple will stick to ARM-based chips for the iPhone.

[via Fortune]