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The first Apple systems in 2006 will use Intel’s Pentium M processor, according to sources familiar with the companies’ plans. The Pentium M uses the same x86 architecture as the Pentium 4, but consumes far less power than Pentium 4 chips and its design philosophy is expected to be the model for Intel’s future processors.

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Industry analysts agreed that the Pentium M product Intel plans to launch in early 2006, the dual-core Yonah processor, could be an industry leader in performance per watt at that point.

IBM’s PowerPC 970FX chip, which Apple called the G5, simply doesn’t lend itself to PC designs that require low power consumption, such as notebooks and small form factor desktops, Jobs said. Apple was also frustrated by IBM’s inability to supply it with sufficient processors last year as the chip maker struggled with yield problems while getting its new manufacturing facility in East Fishkill, New York, up and running.

But Apple accounted for just around 2 percent of IBM’s chip wafer production in East Fishkill, according to industry sources, and IBM is moving away from making chips for the PC market in favor of gaming consoles and high-end servers. An IBM spokesman declined to comment on the nature of his company’s relationship with Apple, but the company put out a statement indicating it probably won’t miss Apple’s business.

“IBM is aggressively moving the Power Architecture beyond the PC, as shown by our recent successes with the next-generation gaming systems announced by Sony, Microsoft and Nintendo. … IBM is focused on the highest value opportunities in each marketplace, and our direction with the Power Architecture is consistent with that strategy,” the company said in a written statement.

Console makers like Sony Computer Entertainment Inc., Microsoft Corp., and Nintendo Co. Ltd. will sell tens of millions of units combined over the next couple of years, and it’s likely that IBM would rather focus its attention on the deals it has struck with all three companies, as opposed to taking on the engineering challenge of making a low-power G5 processor to suit Apple’s small market share.