it doesnt necessarily need to supply other manufacturers to make economic sense, assuming the business is run efficiently, avoiding the mark up placed on every processor purchased by apple that goes in every ipod/iphone (and there are a lot of them), plus with the direct and complete control over supply would likely be an economically viable venture. The reasons more people dont do it is the overhead costs of an acquisition are often prohibitive, which is not so for a company like apple
I hate to put it this bluntly, but that's simply not the case. If you only own 7% of the PC market (for example) and say 1% of the mobile phone market, you are not going to be able to produce memory chips or CPUs as efficiently and cheaply as a supplier that services the other 99%/93% of the market, even if they are competing with 5 or 10 other suppliers. That's just plain old simple supply/demand - besides if the end product starts to have issues with sales, your entire business goes down the toilet because it's all inter-dependent. This is why no one does it!
Why do you think so many companies outsource so many of their services and manufacturing? You have to own the factories, pay the workers, play the transport, keep up with R+D in hundreds of different fields... plus you cannot benefit from competition amongst the suppliers. It makes no sense to supply your self at all, Apple would be crazy to do it.
Now entering into a partnership makes sense (like Sony and IBM with the Cell processor), but then you'd supply that processor to many other vendors too.
Supply line diversification is a fundamental economic principle, and very few companies stray from it.
