This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
At its Worldwide Development Conference last month Cupertino tech giant Apple Inc (NASDAQ:AAPL) announced a big shift for its MacBook Pro product lineup. Apple, which uses Intel Corporation's microprocessors based on the x86 microarchitecture for the notebooks, announced that it will shift to processors that are designed in-house and based on British chip house ARM's architecture. The shift came after years of rumors and it signaled Apple's wariness of Intel's supply chain constraints and other problems.
This change will allow Apple to control its supply chain for the critical components that lie at the heart of all notebooks. Now, following the announcement, market research firm TrendForce is out with key insights about Apple's future custom silicon plans, with the details covering areas including the first product with the chips' launch date and the cost savings that Apple stands to gain from the move.
Apple's First ARM-based Mac Processor Will Ship To Consumers In 2H21, With Wafer Input To TSMC Set For 1H21
TrendForce's research shows that Apple is moving full steam ahead with its plans for custom Mac silicon. While it's unlikely, if not impossible, for the company to make a full shift that replaces Intel's processors on all of its products immediately with the ARM-based processors, Apple will start to make the shift at the start of next year, when the wafer input for the chips starts at TSMC.
Before being placed inside a notebook, microprocessors are the part of large silicon wafers which are then processed at foundries such as TSMC that print billions of tiny circuits in the form of transistors on them. These transistors allow electricity to flow through the processors for conducting the myriad of tasks required by the end-user of a product.
Following the wafer input in 1H21, the first products with the new processors will be available during the second half of the year believes the research firm.
The new chip will cost Apple $100-per-piece and it will be fabricated on TSMC's bleeding-edge 5nm node. For comparison, Intel's Core i3 processors manufactured on the company's 10nm node (roughly equivalent to TSMC's 7nm node) cost roughly $200 - $300 on the market, with prices for the higher end processors, such as the Core i5 and i7 being higher.
If TSMC does take Apple's orders for 5nm Mac processors at the start of this year, then products for Advanced Micro Devices, Inc and NVIDIA Corporation might suffer delays due to capacity constraints. TSMC fabricates central processing units (CPUs) and graphics processing units (GPUs) for AMD and GPUs only for NVIDIA, with both companies competing in a market that does not have other major players. Apart from the two, only Intel offers similar products, which are limited to CPUs for the time being. While Intel uses its own facilities to manufacture its processors, the company is believed to also make the shift to TSMC for the fabrication of its second-generation Xe HP DG2 GPUs in the future.
The first Apple product that features its custom processors will be crucial for the company as it will showcase its proficiency in designing processors that have a different set of needs than the ones currently powering all iPads and iPhones. It will also provide the wider industry with a reference case for ARM's designs as a replacement for the traditional x86 microarchitecture that has dominated consumer and server-grade products such as notebooks, personal computers and servers. Should Apple successfully execute the shift, it will end up disrupting an industry that few have been able to enter due to the proprietary nature of its product designs.
TrendForce's research builds on an earlier note by investment bank Citigroup whose analyst Jim Suva speculated that the company could save as much as half a billion dollars via a complete shift to custom Mac processors by realizing cost savings of $50/unit. Applying Suva's logic to today's savings assumption reveals that Apple just might save in between $1.7 billion - $3.4 billion in a best case scenario.
