how Apple is managing its chip design and production in these trying times

As semiconductor shortages linger and fluctuate, and the pandemic adds to its effects, Apple is in the midst of a historic transition for these Macs. A stack of causes, which greatly complicates his life and requires sacrifices.

The switch from Macs to Apple Silicon chips, initiated at the end of 2020, is both an opportunity and a constraint, it seems, according to Mark Gurman, of Bloomberg. In less than two years, the Cupertino giant introduced its first family of ARM chips for Mac, the M1, M1 Pro, M1 Max and finally M1 Ultra. Four SoCs that impressed testers and users with their performance and power consumption. They have thus enabled the 13-inch MacBook Pro to become champions of ultraportables in autonomy, two generations in a row.

These new chips even gave Apple the ability to create a new line of computers, the Mac Studio. It hadn’t happened since 2008 and the introduction of the first MacBook Air. However, they have not yet covered the entire range of Macs available, since the high-end Mac mini is still powered by an Intel Core processor, and the Mac Pro is still based on Intel Xeon to bring down his task.

Review priorities, and make some sacrifices…

More control and freedom, therefore, to the point that we come to dream of a real new consumer MacBook. Macs are making great strides, while Apple is expected to introduce its M2 Pro, M2 Mac, M2 Ultra in the coming months. Nevertheless, this effort made to transition from Macs to Apple Silicon chips has significant collateral effects, enhanced by the shortage. The pandemic has indeed served as a magnifying glass for a problem of supply of electronic components, magnifying tensions in the production chains.

To release its present and future M-family chips, Apple had to reallocate its development, testing and production resources, according to the reporter from Bloomberg. This effort would have contributed to “slower progress on iPhones, Apple Watch and even wireless modems”.

Mark Gurman then refers to information that he revealed some time ago. For the first time since Apple developed its own chips for its smartphones, all of its iPhones would not be entitled to a new chip next September. Only the iPhone 14 Pro would switch to a new A16 SoC, while the iPhone 14 would be satisfied with an A15 chip, perhaps unchanged.

Similarly, the Watch Series 8 would ship a SiP, the S8, whose performance would be close, or even identical, to that of the S7, present in the Series 7. However, the S7 already offered similar power to the S6. However, this point is not necessarily problematic. The Watch does not need much more power – even if we never say no to more responsiveness and fluidity – as much as increased autonomy.

A third internal chip development project would also be concerned, the development of the in-house 4G/5G modem. On this point, Mark Gurman agrees with Ming-Chi Kuo’s latest predictions. The analyst specializing in production chains recently indicated that Apple would have encountered some difficulties and consequently could not launch its own mobile modem before the second half of 2023. The Bloomberg journalist specifies that according to his sources, the prototypes of Apple’s modem products over the past year or so tend to overheat.

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Between rebalancing and extreme scalability

Several questions therefore arise. Is Apple obliterating a bit of its future, and above all, is it threatening the iPhone business, which still generates around 60% of its income? Hard to say.

Firstly because the development of the M1 and M2 is not completely isolated from the design of the Apple Axx chips. The M1 was based on the A14. The M2 is based on the A15, and there’s no doubt that the M3 will build its family on the architecture of the A16.

Then, we have seen it on two occasions now, the M1 is no longer reserved for Macs, since it has taken place in two different ranges of iPads: the Pro models, 11 and 12.9 inches, and Air.

Finally, Apple is taking the opportunity to rebalance the forces present in its product offering. The MacBook Mx indeed seem to be making a raid on market share – even if they will never represent the volumes of Apple’s smartphones. It must be said that their performance/Watt ratio is unrivaled for the moment and makes them ideal candidates for durable, powerful and silent laptops.

Moreover, this technological concentration was one of Apple’s objectives. By mastering the design of its ARM chips, and making the most of the scalability of this architecture, Apple had in mind the pooling and reuse of its developments. Thus, the HomePods use the SiPs of the Watch, as the iPads adopt the SoCs of the Macs.

A partner and a question of cost

However, as Mark Gurman points out, two elements are beyond Apple’s total control. The first element concerns the progress of TSMC, its privileged partner in the manufacture of chips. The Taiwanese company is at the forefront of deploying ever finer engraving processes. While 3nm should be available by the end of 2022, TSMC recently unveiled its process for creating 2nm chips. On this point, and while waiting for Intel’s new strategy to bear fruit, Apple is totally dependent on its Asian partner. Samsung can’t do as well at the moment.

Another point over which Apple has no control, even if it can try to make adjustments: the increase in component costs linked to the shortage/increase in demand, and to the pandemic. In order to avoid systematically passing on increased costs to users (or to its margin), the company has a few solutions. Not switching all iPhone 14s to the new chip could be a manifestation of this. By only producing a new, and therefore more expensive, chip for certain models, Apple is reducing its costs.

In short, between shortages, explosion of costs and the need to innovate, Apple is currently in a stormy situation. Fortunately for him, he is not the only one: the whole market is at the heart of this same storm All the players do not weigh as much as him, which leaves him a good margin of maneuver to impose himself and negotiate with some assets in hand.

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