Components for first Apple Silicon Macs will cost Apple more, says Kuo
In a report about the implications for the supply chain of Apple's move away from Intel, well-regarded analyst Ming-Chi Kuo says that specific components required to build the first Apple Silicon Macs -- like the rumored 24-inch iMac -- will initially cost the company more.
Components for all new Apple Silicon models are expected to cost Apple more
Following the announcement that Apple is moving its Mac range to Apple Silicon, analyst Ming-Chi Kuo has been examining the expected new demand, plus its impact on suppliers to the company.
In a research note seen by AppleInsider, Kuo says that the shift to Apple Silicon has some additional costs. "Due to design changes, the unit price will increase," Kuo claims. It appears that Kuo is specifically talking about both the cost to Apple for the design effort for the shift and costs borne by suppliers.
It's not yet clear what this will ultimately mean for the consumer. Apple may choose to pass on the greater costs to buyers, but it's equally likely that the cost saving in not buying Intel processors will offset it.
Kuo has discussed the 24-inch iMac redesign previously. In a note just prior to WWDC, Kuo said that the Apple Silicon iMac will use an "all-new form factor design," with a 24-inch display. Besides the Apple Silicon version, Kuo is also predicting an Intel version to ship prior to that transition.
Kuo slightly missed his estimate on how long the migration would take. While Apple CEO Tim Cook said that the transition would take about two years, Kuo said that "we estimate that all Mac models will switch to ARM in 12-18 months," said Kuo, adding an "all-new form-factor design MacBook" model will head into mass production in the second half of 2021.
Elsewhere in the same research note published very early Tuesday morning, Kuo says that he expects consumer Apple demand to rise over the second half of 2020, before the Apple Silicon Macs start arriving.
"Benefiting from the need to work from home," he says, "we have increased the MacBook shipment forecast in 3Q20 by about 30%. Due to increased demand for work from home and demand for MacBook Air, 2H20 shipments are better than expected, so we expect MacBook shipments to grow by about 15% in 2020 to YoY to 16-16.5 million units."
"Our latest survey indicates that Magic Keyboard demand is expected to increase by 10-20% due to better than expected 2H20 shipments," he continues.
Components for all new Apple Silicon models are expected to cost Apple more
Following the announcement that Apple is moving its Mac range to Apple Silicon, analyst Ming-Chi Kuo has been examining the expected new demand, plus its impact on suppliers to the company.
In a research note seen by AppleInsider, Kuo says that the shift to Apple Silicon has some additional costs. "Due to design changes, the unit price will increase," Kuo claims. It appears that Kuo is specifically talking about both the cost to Apple for the design effort for the shift and costs borne by suppliers.
It's not yet clear what this will ultimately mean for the consumer. Apple may choose to pass on the greater costs to buyers, but it's equally likely that the cost saving in not buying Intel processors will offset it.
Kuo has discussed the 24-inch iMac redesign previously. In a note just prior to WWDC, Kuo said that the Apple Silicon iMac will use an "all-new form factor design," with a 24-inch display. Besides the Apple Silicon version, Kuo is also predicting an Intel version to ship prior to that transition.
Kuo slightly missed his estimate on how long the migration would take. While Apple CEO Tim Cook said that the transition would take about two years, Kuo said that "we estimate that all Mac models will switch to ARM in 12-18 months," said Kuo, adding an "all-new form-factor design MacBook" model will head into mass production in the second half of 2021.
Elsewhere in the same research note published very early Tuesday morning, Kuo says that he expects consumer Apple demand to rise over the second half of 2020, before the Apple Silicon Macs start arriving.
"Benefiting from the need to work from home," he says, "we have increased the MacBook shipment forecast in 3Q20 by about 30%. Due to increased demand for work from home and demand for MacBook Air, 2H20 shipments are better than expected, so we expect MacBook shipments to grow by about 15% in 2020 to YoY to 16-16.5 million units."
"Our latest survey indicates that Magic Keyboard demand is expected to increase by 10-20% due to better than expected 2H20 shipments," he continues.
Comments
This headline is a bit misleading. Of course, new models and new tooling cost more than reusing similar designs. That’s the very nature of any new design. Obviously, the added costs of the transition are taken into account by Apple.
I dont see anything non-obvious or materially relevant in this article. Just comments about what is normal.
But back to chips for a moment, we can already see how Apple are able to offer rapid development of processors such as the Apple Watch's SoC, by channeling their existing R&D into designs that normally would not be commercially viable. Evidence of this is how Qualcomm have stalled development of chips for wearables, not because they lack R&D craft, but because the business model doesn't add up. Another example of a relatively cheap device that offers specialised technologies is AirPods. If a company wanted to product the H1 chip from scratch, or by sourcing chips, the cost of their earphones would be astronomical and the size would also be physically larger. It's most likely that the cost of Apple's mac lineup will remain unchanged, and the Pros would be priced to match market expectations (like they are already!)
In terms of performance I find that people are being too myopic here - the Mac is no longer required to follow the traditional concept of a powerful general processing unit tied to an array of secondary specialised hardware. Instead you are more likely to see an approach that mirrors the iPad, with the central processor taking on wide fields of specialised processing functions that Apple tailor to their device function. This is why you can put an iPhone next to a Qualcomm based device and the iPhone will smoke it, benchmarks will need to be redesigned for end-use speed, not just crunching numbers in a bunch of different scenarios.
I replaced my legacy MBP and iMac two years ago, and my daughter's legacy MBP and my wife's 6 years old MBP within the last month.
Okay, no way am I going to need to spend the money to upgrade anything in the next two years.
Apple's transition to two years must be based on some estimate of their customers' upgrade cycles. Unless they and their developers offer very strong reasons to upgrade, that transition will take quite a while.
So, what customers are Apple going after? My guess is legacy Windows users owning iPhones and iPads, for one. People owning iPhones and iPads, but no computer. Chrome computer users?
The Mac Pro is upgradeable by design. So, if Apple puts out a 32-core Apple Silicon board, you might get a transition there.
The more you sell, the more you amortise the first cost over all of the sold devices. Apple is already investing the money into the first part for the iPhone/iPad SoCs - it is an incremental additional cost to do a new design for Macs. But let's say it's $500m for a 5nm design at this stage. Apple will ship 16m Macs a year. That's $31 per Mac. It'll be lower because a lot of that cost is shared with iPhone SoC.
A 5nm wafer processing cost might be $12k (dropping as it matures) right now. It's 80% denser than 7nm. Let's assume they use that for the additional CPU cores and GPU cores the desktop chip would have and the resulting chip is 10.1mm x 12.6mm just like the A12Z. Even with poor yields you get over 300 fully working die per wafer out of ~450. That's a fabrication cost of $40 for each fully working die (and you'll get partially working dies as a bonus as well, for your lower-end products).
I imagine that Apple want to grow the Mac business and will use lower priced Macs with those recovered dies to achieve that - although there's a certain level of quality that Apple won't go below.
How much does Apple pay Intel for the chips in their laptops currently? Sure, it's discounted over list price, but it will be far, far higher than $71.
These numbers are extremely rough estimates.
Without a $ figure just useless speculation.
Sure, Rosetta was a bit pokey (owing greatly to the difference between Little Endian and Big Endian representation between Intel and PPC G5 CPUs). But, other than that, there were few real problems.
Both Qualcomm and Intel are capable of hiring the talent necessary to create their own versions of Apple’s “subsystems” present in their Ax SoCs. So why don’t they?
That said, I agree with Rayz2016. Pricing of new models comparable to current models will be very close to the same.
If the price of Intel’s CPUs is “reduced”, I’d hate to see what they would charge otherwise!