When it comes to global technology companies, Apple is definitely among them. Apple is one of the most profitable technology companies in the world. In 2020, Apple’s global market value reached $2.15 trillion, ranking first among global listed companies.
The secret of Apple making money is that it never gives up creating its own “unique” products. Now, Apple wants to create its own chip “kingdom”.
From A to M, seeing Apple’s ambition
On December 20th, foreign media reported that the development of Apple’s M2 processor is nearing completion and will use TSMC’s 4nm process. In the future, Apple’s self-developed computer chips will be upgraded every 18 months. It is expected that in the second half of 2022, Apple will first launch the M2 chip with the R&D code name Staten, and then launch the new M2X chip architecture with the R&D code name Rhodes in the first half of 2023. Two chips, including the M2 Pro and M2 Max, will be released based on different display cores.
Apple currently uses different chips on iPhones, iPads, and Macs, and in its future plans, Apple will carry out the action of “cars on the same track, books on the same text” to the end.
Back in June last year, Apple announced a very important update at the WWDC (Apple Global Developers Conference) that Apple would abandon Intel’s chip services and use Apple Silicon based on ARM architecture. On WWDC, CEO Cook did not disclose the specific content of this chip, only compared it with the A12Z chip. A12Z is a chip used in iPad Pro since 2018, when Apple “magically modified” A12Z based on A12. However, Cook announced his future product line at this conference and promised to directly launch Mac laptops using Apple Silicon chips by the end of this year.
On November 11, 2020, Chinese consumers were chopping their hands during the “Double Eleven” Carnival, and Apple launched a self-developed SoC chip called M1 and three Macs using M1 as scheduled. Since then, Apple has equipped self-developed chips on smartphones, tablets, and PCs, all based on arm architecture. Apple claims that this can improve the smoothness of the interconnection of Apple’s operating system on different terminals. The promise of de Intel implementation within 2 years was announced by Apple within 1 year. More memory and faster speed than Intel chips have cooled the hearts of Intel, which wants to restart cooperation with Apple.
Apple M1 parameters
For a period of time in the past, Apple has been using Intel chips as its Mac processor chips, which is in contrast to the A-series in other Apple products. The system name of iPhone 13 is iOS 15, and its CPU is called A15. The system of iPhone 12 is called iOS14, and its CPU is A14, which is a very typical interdependence between the two numbers. In the past, due to Intel’s technology, the Mac series was isolated.
At present, the latest iMacs and Macbooks are already equipped with M1 chips, transitioning from x86 architecture to Apple’s self-developed processors using ARM architecture. The last such architecture switch was in 2005, when Steve Jobs announced on WWDC that the Mac would gradually abandon IBM PowerPC and switch to x86.
In addition to the shift towards self-developed CPUs, Apple is also accelerating its progress in fully autonomous GPUs and baseband chips. Foreign media reported that Apple is still developing 16 and 32 core GPUs for Apple Silicon and is testing higher priced options, which may include 64 and 128 cores.
Obstacles to Apple Chip Dream
Insufficient production capacity for high-end processes
The M1 chip adopts a 5nm process, and research institutions estimate that the current production capacity of TSMC’s 5nm process is mostly used to contract Apple’s A14 biomimetic processor. The orders for M1 chips are expected to account for 25% of the 5nm process capacity.
If we consider Apple’s M1 as a piece of stone carving art, TSMC’s 5nm OEM can be seen as a highly skilled stone carving master. Without this master’s craftsmanship, good works cannot be produced. In the previous generations of the iPhone, Apple would also choose Samsung as the OEM company. Starting with the A8 processor of the iPhone 6, Apple transferred the OEM to TSMC. At that time, Samsung threatened to file a patent lawsuit with Apple and TSMC to the end. And finally, a few months after TSMC entered the Apple production base, the two companies finally bypassed Samsung’s patent barriers, and from then on, the alliance between Apple and TSMC was officially established.
Now, due to the insufficient production capacity of TSMC’s 5nm process, Apple may collaborate with Samsung again. At the same time, Qualcomm also needs advanced process production capacity, and TSMC’s deep partnership with Apple makes TSMC a priority policy for Apple. Qualcomm is very dissatisfied with this.
At present, the global wafer production capacity is tight, and the advanced process wafer production capacity is only controlled by TSMC and Samsung. Qualcomm is teaming up with Samsung, while Apple is teaming up with TSMC. In the future, the competition between these two major groups may become increasingly fierce. The Apple series of products may be affected by this competition.
Tight supply chain makes it difficult to deliver the entire machine
Although large companies can guide the creation of new sales nodes, losing significant sales nodes can also have a significant impact.
Nikkei News previously reported that Apple will have a supply nightmare this Christmas. Due to the limited ready-made components and chips, Chinese Mainland, as an assembly center, lacks the necessary components and chips. Many important assembly plants were almost shut down during the October Golden Week when they should work overtime, which had never happened before.
This time, the missing chip is not an expensive main controller. On the contrary, what really troubles Apple is the “peripheral” components that are only a few cents worth, such as Texas Instruments’ power management chip and Nexperia’s transceiver, as well as connection chips like Broadcom. Such chips are not exclusive to iPhones, smartphones or even consumer electronics, but are used in computers, data centers, home appliances and connected cars. Assembly cannot be completed as long as one component is missing.
Apple’s serious supply chain problems have not eased. The months long blockade in Vietnam has affected Sharp’s production plan for the iPhone camera module, which has delayed the final product assembly schedule. The disruption of Malaysia’s supply chain has affected the production of many electronic components and chips; The sudden Southeast Asian typhoon in December displaced 35000 people and closed a large number of component factories due to floods.
Cook predicts that the impact on the supply chain will be greater in the last quarter of this year. The delivery time for new orders from Apple consumers has been as long as two months.
Need to balance supplier relationships
On December 17th, foreign media revealed that Apple is building a new office in Irvine, California, near Los Angeles, USA. Recruitment information shows that the new office will be a research and development hub for wireless chips such as baseband, RF, Bluetooth, Wi Fi, etc. The news of Apple’s self-developed baseband began two years ago, but this time it has vigorously entered the fields of PA RF power amplifiers, Bluetooth, Wi Fi, and other fields, directly affecting the “cake” of suppliers. In the past, suppliers of these products include Skyworks, Qorvo, Broadcom, Qualcomm, and others. In the past few years, Apple has been using high salaries to poach talent from suppliers, causing a lot of them to complain incessantly.
Skyworks, Qorvo, and Broadcom are all giants in the RF field. In 2018, Skyworks, Qorvo, Broadcom, Qualcomm, and Murata, the five major manufacturers, had already occupied 80% of the RF front-end market share. Bloomberg data shows that orders from Apple account for about 20% of Broadcom’s sales, while Skyworks relies more on Apple, contributing nearly 60% of its revenue. Apple’s chip dream is troubling supplier friends.
But the situation is not as simple as imagined. Recently, news has spread that although Apple is accelerating its de Intel transformation, the relationship between Apple and Intel has not been completely severed. Apple still has an Intel based Mac under development and has not yet released any conclusive information. Apple is not yet fully confident in transitioning from Mac Pro to Apple Silicon’s self-developed series. Mac Pro is generally designed for desktop level professional workstations used in the animation, photography, and film and television industries.
It is worth noting that in 2017, when Apple announced its own GPU development, Imagination UK’s revenue plummeted. This company had previously provided Apple with GPU cores. However, Apple’s GPU self development did not go smoothly. In 2020, Apple resumed cooperation with Imagination and reached a new license agreement.