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Apple’s homegrown Mac chips have undoubtedly shaken up the PC processor industry, boosting the company’s sales of desktops and laptops and prompting rivals to keep looking for new solutions.
Over the past year and a half, Apple has introduced five main types of Mac chips, from the M1 to the M1 Ultra to the M2. But senior Apple whistleblower Mark Gurman expects Apple to launch more products in the next year or so, including the M2 Pro, M2 Max, M2 Ultra and M3.
In order to achieve the above goals, Apple’s chip team had to shift a lot of testing, development and production resources to the Mac chip. The question is whether this affects other products. Combined with supply bottlenecks, this focus could slow development of iPhones, Apple Watches and even cellphone modems.
For the first time since Apple began designing its own processors, the company will not upgrade its flagship new iPhone chips this year. The entry-level iPhone 14 released this fall will continue to be powered by the A15 chip launched last year, with only the iPhone 14 Pro version featuring the new A16 processor.
The Apple Watch’s processing performance is also expected to remain unchanged for the third year in a row, something that has never happened before. Gurman recently discovered that the S8 chip built into the Apple Watch Series 8 will be similar in performance to the S7 chip in 2021, and roughly the same as the S6 chip in 2020.
The annual performance growth of Apple’s iPhone processors has also slowed in recent years. While the A15 chip on the iPhone 13 is undoubtedly more advanced, including an improved graphics processor, a new more efficient CPU design, and an upgraded video encoder, Apple didn’t even bother to compare its speed to the A14.
Instead, the company started focusing on comparing the A15 to rival processors, more often emphasizing that its chip is 50 percent better than its rivals. That’s a departure from the past, where Apple preferred to compare its new iPhone chips to its own predecessors, often delivering 20 to 50 percent better performance.
Apple’s strategy to develop a cellular modem, which aims to replace components supplied by Qualcomm, has also apparently run into trouble. Apple’s well-known analyst Ming-Chi Kuo recently said that Apple’s modem project has temporarily “failed.” Gurman also said that in the past year or so, he has heard that Apple has been struggling with the problem of overheating chips.
Opinions are divided on when Apple actually plans to launch its own modem. Some analysts speculate that it might be 2023, but Gurman always sees 2024 as the earliest date Apple’s modem could be unveiled, as the company only started working on the project around 2019. Given the complexity of building a brand-new chip while still rivaling its Qualcomm counterparts in performance, that’s certainly going to be a huge challenge.
Given that Mac sales started to slow a few years ago, Apple certainly needs to invest more. But ignoring non-Mac chip development is not a smart move. Don’t forget that 60% of Apple’s revenue still comes from devices that don’t yet have an M1 or M2 chip, although the technology used in the Mac chip may eventually make its way to other devices.
The broader question is whether Apple’s chip division has become too fragmented, fueling employee burnout. Many engineers say the company operates with precision, making it a demanding workplace. While Apple’s chip business continues to grow around the world, the team has lost many engineers over the past few years at a higher-than-normal level of natural departure.
Apple has moved to consolidate its chip business, including the option to install Mac chips in iPads and upcoming mixed reality (MR) headsets. Meanwhile, Apple is also using the Apple Watch processor in the HomePod. That means Apple doesn’t have to build specific chips for the iPad, MR headset, and HomePod.
But there are some things Apple doesn’t fully control, most notably global chip production and supply. Apple relies on TSMC to make its chips, and it needs TSMC to produce a lot of semiconductors using an improved 3-nanometer node process. That reliance could hamper Apple’s chip development efforts.
The second factor is cost. Chip supply shortages have greatly increased the cost of manufacturing and shipping components. Using the A16 chip for the higher-priced, higher-margin iPhone 14 Pro line makes it easier for Apple to absorb the price hike without passing it on to consumers. Likewise, keeping the same general-purpose processor in the Apple Watch helps keep costs down. (small)