By Tripp Mickle

Nearly 15 years after striking a deal with Intel Corp. to power its Mac laptops and computers, Apple Inc. is going solo.

Chief Executive Tim Cook said Monday that Apple would begin jettisoning Intel processors from its Macs later this year in favor of more efficient integrated chips designed by the tech giant's silicon engineers.

The change reflects a turnabout in Silicon Valley since Steve Jobs revealed the Intel partnership in 2005. At the time, Apple was a fraction of Intel's size and counted computers as its largest business. Now, it boasts a market value six times larger than its longtime supplier and a semiconductor division that has been designing mobile processors with performance capabilities rivaling Intel's computer chips.

During a digital keynote to kick off the tech giant's first virtual conference for developers, Apple said the transition from Intel to its own processors would occur over the next two years, with the first Macs with custom-designed chips shipping by year-end. The company said the chips, based on Arm Holdings technology, will improve battery life and allow for faster processing speeds and new security features.

"At Apple, integrating hardware and software is fundamental to everything we do," Mr. Cook said. "That's what makes our products so great, and silicon is at the heart of our hardware."

The chip transition headlined a day of software updates that included the introduction of a language translation service, features that improve group messaging on iPhones and sleep-tracking capabilities for the Apple Watch.

The new software was part of Apple's annual effort to galvanize the more than 20 million developers designing apps for iPhones, iPads and Macs, despite holding its annual meeting remotely because of the coronavirus pandemic. Its push carried extra significance this year amid a backlash from some developers frustrated over the company's App Store rules and practice of collecting 30% of app sales. The European Union last week opened an antitrust investigation into the App Store fees, which Apple has called baseless.

Apple's plan to bring its own processors to MacBooks has the potential to open its laptops to more iPhone developers, making it possible for their mobile apps to work more seamlessly on the roughly 20 million Macs it ships each year. It is an ambitious undertaking that will require some software developers to update their applications for the new system.

The new chips could make it possible for Apple to bring special features to future Macs, just as it has done to speed image processing through machine-learning algorithms on its iPhones. It can also integrate 5G modem chips in the future, helping unlock new sales of a Mac business that was Apple's third-largest unit, with nearly $26 billion in sales, last year.

The plan fits into Apple's broader strategy of replacing many third-party chips with components designed in house. The technology giant now makes about 42% of the core components in iPhones, according to Wayne Lam, an independent technology analyst, up from 8% less than five years ago

Custom chips on the iPhone and iPad have cut costs, boosted performance and increased Apple's control over future releases. Intel had run into supply constraints in recent years and fallen behind schedule on its own technology road map. It also charged Apple about $75 to $150 more per chip than it would cost the company to build its own processors for the Mac, according to analysts, who said Apple can pass those savings on to customers or shareholders.

"Apple felt limited by Intel because sometimes the products they wanted to launch and the silicon chips Intel had available were out of sync," said Carolina Milanesi, a tech analyst with Creative Strategies. "Now they can line up the design of the silicon, software and hardware to deliver one thought-out product that's better in power and performance."

Once the transition fully takes place, Intel stands to lose a major portion of its revenue from Apple, which analysts estimate at roughly $3 billion a year. The split comes a year after Apple struck a deal to buy Intel's modem business for $1 billion and is the latest in a series of recent setbacks, including manufacturing issues and stepped-up competition from Advanced Micro Devices Inc.

Apple will remain an Intel customer, using the chip-maker's technology to power servers that handle its cloud-computing services, among other areas of business. Intel said it would focus on providing chips for PCs, which it believes provides customers with "the best experience" and developers with "the most open platform."

The switch might not herald things to come for other PC makers that buy from Intel, however. By and large, they lack the size and expertise to undertake the expensive and time-consuming process of designing their own chips. Analysts at Raymond James said Apple was the only PC manufacturer capable of designing chips in house.

Apple's new chip architecture will include graphics processing units designed in house as well. AMD currently supplies graphics cards for many Intel-based Macs, and analysts don't expect that to change, at least in the immediate future, for higher-end models.

Changing central processing units, or CPUs, is a difficult task that puts new burdens on the developers designing software for Macs. Chips speak different languages -- called "instruction sets" -- and software that runs on an Intel chip will need to be retooled to work on Apple's Arm-based chips.

Apple managed that transition smoothly in 2005 when it shifted from PowerPC to Intel processors. It had been secretly building versions of its operating system for Intel chips for five years in anticipation of the move and offered developers a "transition kit" to manage the change. It is providing a similar trio of tools to help software developers switch to its Arm-based chips -- including a Mac Mini available this summer with the new chip, the same A12Z processor currently in iPad Pros.

Software chief Craig Federighi said Apple would continue to support and release new versions of its computer operating system for Intel-based Macs for years to come. He said Apple designed its new Mac operating system, MacOS Big Sur, to work on the new chips. The system has been redesigned to look more like Apple's mobile operating system and has added functionality to the Safari web browser so it can display how websites track users.

In a reversal from years past, the iPhone, still the company's most important product, took a back seat to the Mac. The focus reflected Apple's evolving strategy: As iPhone sales have slowed in recent years, it has looked to deliver growth by emphasizing sales of connected services and accessories, such as its streaming-music app and smartwatches.

The company said its mobile operating system coming this fall, iOS 14, will include a new app called Translate to provide real-time translation of conversations or text across 11 languages. It also is updating its iMessage system to allow users to pin conversations, thread replies and mention people directly in a group text exchange.

Apple is adding sleep-tracking features to its smartwatch operating system, collecting Apple Watch users' overnight movements and breathing to detail the quality of each night's rest. To encourage proper hand-washing amid the pandemic, the company also said its watches will initiate a 20-second countdown timer when it hears squishing and senses hand-washing motion.

--Asa Fitch contributed to this article.

Write to Tripp Mickle at Tripp.Mickle@wsj.com