Apple may be saving billions in component costs by switching to M1 Mac

Posted:
in General Discussion
Apple may be saving around $2.5 billion in component costs by swapping Intel processors to M1 chips in some of its Mac and MacBook models.

Credit: Andrew O'Hara, AppleInsider
Credit: Andrew O'Hara, AppleInsider


That's an estimation by Sumit Gupta, IBM's vice president of AI Strategy. Gupta did some math based on rough estimates of Apple shipment volumes to arrive at that conclusion of Apple Silicon savings.

The IBM executive began with the assumption that Apple has shipped 8.6 million 13-inch MacBook Pro units and 5.4 million MacBook Air units throughout 2020.

From here, Gupta assumed processor costs of $40 to $50 per each M1 chipset. That's compared to an Intel Core i5 dual-core CPU for the MacBook Air, priced at about $175 to $200, and an Intel Core i5 quad-core CPU for the entry-level MacBook Pro, priced at $225 to $250.

Based on those component costs, the IBM VP suggests that Apple may have spent $3.2 billion on CPUs for Intel MacBook Air and MacBook Pro models. The same volume of M1-equipped devices would bring that total down to $697 million, a savings of $2.5 billion.

Of course, the glaring issue with this math is that it assumes all Mac models are MacBooks. They're not. Gupta didn't account for devices like the iMac, Mac Pro, or Mac mini in his overall Mac sales assessment.

And although cost was likely a factor in Apple's decision to move away from Intel, it's probably not one of the more important ones. More likely is that Apple wanted to free itself from the constraints of Intel product delays and a slowing roadmap of advancement.

Additionally, as Apple executives have explained and benchmarks have proven, the company's silicon technology brings a number of significant improvements to the user experience, such as battery life and performance.

Morgan Stanley does estimate that the MacBook Air, 13-inch MacBook Pro, and Mac mini made up about 91% of all Mac shipments in the past twelve months. Even if Gupta's math doesn't take the Mac mini and other desktops into account, Apple is still likely saving quite a bit of money with the M1 chip versus Intel processors.
«1

Comments

  • Reply 1 of 24
    crowleycrowley Posts: 10,453member

    From here, Gupta assumed processor costs of $40 to $50 per each M1 chipset. 
    And this assumption was based on....?
    williamlondonmuthuk_vanalingamforgot username
  • Reply 2 of 24
    Is he factoring R&D for the M1 into that figure?
    williamlondonforgot usernamewatto_cobra
  • Reply 3 of 24
    (Lower cost chip  +  Higher Performance)  x  (Reduced sale price/Higher Profit margin per unit  x  Increased Demand) Billions

    Apple is  D O O M E D

    I always wanted to say that..
    rundhvidcy_starkmanBeatsradarthekatwatto_cobra
  • Reply 4 of 24
    sflocalsflocal Posts: 6,105member
    That's more money not going to Intel for essentially dropping the ball.  Well deserved Apple!
    Beatsradarthekatwatto_cobra
  • Reply 5 of 24
    dewmedewme Posts: 5,492member
    Is he factoring R&D for the M1 into that figure?
    I doubt it, but keep in mind that Apple already had a sizable in-house investment for their A-series processors and probably now gets to share a lot of the R&D burden and benefits across multiple product groups. The net cost of the total R&D will be higher going forward, but the overall benefits, strategic and tactical, should be enormous. The reduced processor and component costs are gravy.
    edited November 2020 larryjwraybobeowulfschmidtradarthekatwatto_cobra
  • Reply 6 of 24
    Competition will be crucified.
    williamlondonwatto_cobra
  • Reply 7 of 24
    omasouomasou Posts: 604member
    The estimates only take into account machines w/on chip GPUs. Since the new M1 is crushing even the MacBook Pro 16" with discrete graphics there should be even more savings.

    Though Apple will need to beef up the GPUs and add dual 5K screen support before I can switch.

    It's a bad day to not be Apple.

    Wonder if Intel/AMD will attempt to dust off and crank up the 80' FUD machinery.
    edited November 2020 Beatswatto_cobra
  • Reply 8 of 24
    What about the savings for the separate RAM, I/O chipset, GPU chipset, T2Chip, NVMe Controller etc.  and all the saved motherboard space. Printing it all in one go on the SOC 
    radarthekatwatto_cobra
  • Reply 9 of 24
    mobirdmobird Posts: 756member
    ↑↑↑↑↑. 

    oberpongo said:
    What about the savings for the separate RAM, I/O chipset, GPU chipset, T2Chip, NVMe Controller etc.  and all the saved motherboard space. Printing it all in one go on the SOC 

    You might want to check on the Appleinsider website, they actually have an article regarding this very subject.


    watto_cobra
  • Reply 10 of 24
    lkrupplkrupp Posts: 10,557member
    crowley said:

    From here, Gupta assumed processor costs of $40 to $50 per each M1 chipset. 
    And this assumption was based on....?
    Pulling it out of his ass.
    Beatswatto_cobra
  • Reply 11 of 24
    omasou said:
    The estimates only take into account machines w/on chip GPUs. Since the new M1 is crushing even the MacBook Pro 16" with discrete graphics there should be even more savings.

    Though Apple will need to beef up the GPUs and add dual 5K screen support before I can switch.

    It's a bad day to not be Apple.

    Wonder if Intel/AMD will attempt to dust off and crank up the 80' FUD machinery.
    If Apple simply doubles the M1 CPU/GPU cores for the 16" MBP that would  rival the Xeon 16-core in the MacPro (peak performance) just below the 24/28 core. On the GPU they would be able to eliminate 3rd party card in every machine maybe other than the iMacPro and MacPro. My guess is that the MacPro will like be the only ARM Mac to retain 3rd party graphics cards. I also suspect will see the exact same two chips in the low-end (M1) and high-end (M1x) iMacs. Then we'd be looking at one more M1 (M1xe) for the MacPro.

    A doubled M1 (M1x) shouldn't have any problems inside of a 16" MBP's thermal envelope, especially with the RAM and GPU on the SOC. In fact, there will likely be far more overhead for sustained performance.

    I suspect there may actually be some small compression in the pricing tiers based on the cost savings to make the machines even more competitive.

    No matter what, price-performance-per-watt wise PCs will look expensive. I'll call it the "Intel Tax"! There will be no PC laptop that will come anywhere close to the M1x beast in the MBP 16".
    watto_cobra
  • Reply 12 of 24
    People are always talking about the economies of scale saving money for the company, but it's unlikely Apple will pass those savings on to customers.  I personally don't care as an Apple shareholder if the prices remain the same, but I would like to see Apple gain some computer market share and less expensive hardware might put Apple products into the hands of more consumers.  Of course, if M-series laptop computers are really compelling in power and battery life, maybe more consumers will be tempted even if they have to pay more than for some plastic Wintel laptop.  One can only hope.  I know the people at Intel Corp. will say how they don't care if Apple doesn't buy any more chips from them and that Apple was too finicky, anyway.

    Apple always got blamed for over-heating and thermal-throttled computers but Apple had to work with Intel who kept falling behind in reducing the chip node.  Intel would just add more cores and hope for the best.  Intel promised Apple cooler running chips and didn't deliver, but it was Apple that got blamed.  I'm happy to see this ending as soon as possible and now that Apple is using its own chips that run much cooler, Apple can be vindicated as it wasn't entirely their fault.  Thank you, Apple.

    I know people will continue to say Apple can't innovate, but Apple Silicon for laptops/desktops really is innovation and not just evolution because Apple is going against x86 computer industry standards. AGTOW (Apple going their own way) will likely disrupt the x86 laptop market.
    muthuk_vanalingamwatto_cobra
  • Reply 13 of 24
    People are always talking about the economies of scale saving money for the company, but it's unlikely Apple will pass those savings on to customers.  I personally don't care as an Apple shareholder if the prices remain the same, but I would like to see Apple gain some computer market share and less expensive hardware might put Apple products into the hands of more consumers.  Of course, if M-series laptop computers are really compelling in power and battery life, maybe more consumers will be tempted even if they have to pay more than for some plastic Wintel laptop.  One can only hope.  I know the people at Intel Corp. will say how they don't care if Apple doesn't buy any more chips from them and that Apple was too finicky, anyway.

    Apple always got blamed for over-heating and thermal-throttled computers but Apple had to work with Intel who kept falling behind in reducing the chip node.  Intel would just add more cores and hope for the best.  Intel promised Apple cooler running chips and didn't deliver, but it was Apple that got blamed.  I'm happy to see this ending as soon as possible and now that Apple is using its own chips that run much cooler, Apple can be vindicated as it wasn't entirely their fault.  Thank you, Apple.

    I know people will continue to say Apple can't innovate, but Apple Silicon for laptops/desktops really is innovation and not just evolution because Apple is going against x86 computer industry standards. AGTOW (Apple going their own way) will likely disrupt the x86 laptop market.
    The M1 Macs are without question price competitive now. In fact, I would argue that the Windows PCs in the same price range are overpriced, hence the "Intel Tax". Apple is going to mop up everything over $900.


    Beatswatto_cobra
  • Reply 14 of 24
    Rayz2016Rayz2016 Posts: 6,957member
    Meanwhile, in other news:

    https://www.macrumors.com/2020/11/18/run-windows-software-on-m1/

    That's incredible when you consider that we're on literally the cheapest Apple Silicon device you can buy - one that gets thermally throttled and is missing a GPU core.
    I can't tell you how cool that is; there is so much emulation going on under the covers. Imagine - a 32-bit Windows Intel binary, running in a 32-to-64 bridge in Wine / CrossOver on top of macOS, on an ARM CPU that is emulating x86 - and it works! This is just so cool.


    Looks like Apple may have discovered the mythical “god chip”.

    edited November 2020 commentzillaBeatsmuthuk_vanalingamwatto_cobra
  • Reply 15 of 24
    BeatsBeats Posts: 3,073member
    People are always talking about the economies of scale saving money for the company, but it's unlikely Apple will pass those savings on to customers.  I personally don't care as an Apple shareholder if the prices remain the same, but I would like to see Apple gain some computer market share and less expensive hardware might put Apple products into the hands of more consumers.  Of course, if M-series laptop computers are really compelling in power and battery life, maybe more consumers will be tempted even if they have to pay more than for some plastic Wintel laptop.  One can only hope.  I know the people at Intel Corp. will say how they don't care if Apple doesn't buy any more chips from them and that Apple was too finicky, anyway.

    Apple always got blamed for over-heating and thermal-throttled computers but Apple had to work with Intel who kept falling behind in reducing the chip node.  Intel would just add more cores and hope for the best.  Intel promised Apple cooler running chips and didn't deliver, but it was Apple that got blamed.  I'm happy to see this ending as soon as possible and now that Apple is using its own chips that run much cooler, Apple can be vindicated as it wasn't entirely their fault.  Thank you, Apple.

    I know people will continue to say Apple can't innovate, but Apple Silicon for laptops/desktops really is innovation and not just evolution because Apple is going against x86 computer industry standards. AGTOW (Apple going their own way) will likely disrupt the x86 laptop market.

    Apple didn't add any new features which is a shame. Was hoping to see new designs, new App Store, cellular chips, FaceID etc.

    With that said we do not know the component costs but it seems Apple did not pass any savings down to us. This could be a good thing since Apple is always inventing and being innovative and all that extra money just means a fatter R&D wallet.
    radarthekat
  • Reply 16 of 24
    BeatsBeats Posts: 3,073member
    Rayz2016 said:
    Meanwhile, in other news:

    https://www.macrumors.com/2020/11/18/run-windows-software-on-m1/

    That's incredible when you consider that we're on literally the cheapest Apple Silicon device you can buy - one that gets thermally throttled and is missing a GPU core.
    I can't tell you how cool that is; there is so much emulation going on under the covers. Imagine - a 32-bit Windows Intel binary, running in a 32-to-64 bridge in Wine / CrossOver on top of macOS, on an ARM CPU that is emulating x86 - and it works! This is just so cool.


    Looks like Apple may have discovered the mythical “god chip”.


    When people argued that an ARM Mac would have compatibility issues I said Apple would figure it out. This is common sense to anyone who's been following Apple for more than a decade.

    Things are looking good.
    radarthekat
  • Reply 17 of 24
    Beats said:
    People are always talking about the economies of scale saving money for the company, but it's unlikely Apple will pass those savings on to customers.  I personally don't care as an Apple shareholder if the prices remain the same, but I would like to see Apple gain some computer market share and less expensive hardware might put Apple products into the hands of more consumers.  Of course, if M-series laptop computers are really compelling in power and battery life, maybe more consumers will be tempted even if they have to pay more than for some plastic Wintel laptop.  One can only hope.  I know the people at Intel Corp. will say how they don't care if Apple doesn't buy any more chips from them and that Apple was too finicky, anyway.

    Apple always got blamed for over-heating and thermal-throttled computers but Apple had to work with Intel who kept falling behind in reducing the chip node.  Intel would just add more cores and hope for the best.  Intel promised Apple cooler running chips and didn't deliver, but it was Apple that got blamed.  I'm happy to see this ending as soon as possible and now that Apple is using its own chips that run much cooler, Apple can be vindicated as it wasn't entirely their fault.  Thank you, Apple.

    I know people will continue to say Apple can't innovate, but Apple Silicon for laptops/desktops really is innovation and not just evolution because Apple is going against x86 computer industry standards. AGTOW (Apple going their own way) will likely disrupt the x86 laptop market.

    Apple didn't add any new features which is a shame. Was hoping to see new designs, new App Store, cellular chips, FaceID etc.

    With that said we do not know the component costs but it seems Apple did not pass any savings down to us. This could be a good thing since Apple is always inventing and being innovative and all that extra money just means a fatter R&D wallet.
    New designs? What are you making reference to?
    watto_cobra
  • Reply 18 of 24
    entropysentropys Posts: 4,213member
    The point of using the exact machines as previously with the same configuration was to make it all about the chip.

    Now the point is made if that will continue to apply on the next models with m series chips  is unknown.
    watto_cobra
  • Reply 19 of 24
    avon b7avon b7 Posts: 7,831member
    Now Apple should look at ways to spread the fab map out.

    If things go belly up where they are fabbing, a large part of its hardware business would be affected once the transition is over. 

    This has been the case for a while now but now there are even more eggs in the basket. 
  • Reply 20 of 24
    tmaytmay Posts: 6,416member
    avon b7 said:
    Now Apple should look at ways to spread the fab map out.

    If things go belly up where they are fabbing, a large part of its hardware business would be affected once the transition is over. 

    This has been the case for a while now but now there are even more eggs in the basket. 
    You mean like China Invading Taiwan? Earthquakes in Taiwan?

    It's funny that you don't mention that "belly up" pretty much describes what happened to Huawei's Kirin for "political" (really National Security) reasons.

    TSMC will be building a fab in Arizona, but it won't be up and running until around 2024, and it may not be at a leading node anyway. It's there for National Security reasons since the U.S. Military, and Western Military's in general, are users of ARM based devices. Apple could also dual source to Samsung, But otherwise, there aren't any foundries outside of Taiwan or South Korea that are at a leading edge node, though Intel will probably get itself back to a leading edge node this decade.

    Apple could build their own fabs at some point in time, but the most likely outcome is that TSMC will create fabs somewhere else in South Asia and/or South America.
    edited November 2020 watto_cobra
Sign In or Register to comment.