Yes. Intel microprocessors are expensive. However, it seems to get lost on people that Apple Silicon-based Macs will use SoC, not microprocessors. A lot of the support chips required of microprocessor-based systems will part of the SoC. When people tear down the new Macs, many will be surprised by how seemingly sparse their circuitry will be. That will all contribute to lower costs to manufacture and lower retail price.
Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
ARMacs prices?
- Thread starter robertosh
- Start date
- Sort by reaction score
I agree on the manufacture part. I see no reason for Apple to lower the retail price. They have go people used to the current cost. People will keep paying the current cost. Why lower prices?
I’m not sure which way Apple will go but if we say that a base MacBook Pro costs them $650 to make, based on their historic 50% profit margins on products. The Intel chip they use for the base MBP right now is maybe $200? Apple could theoretically knock $100 off the price of the Apple Silicon MacBook Pro while maintaining an even bigger profit on it and that’s without considering any other savings they might have from the switch.
If they can make more money per product while lowering the price that’s essentially a dream scenario for them because a lower price generally means more units sold so they come out way ahead of when they were partnered with Intel.
Depends if they can make that many Macs. I've been a Mac user for long enough to remember days when you had to order the minute new Macs became available in the store or wait weeks or even months for one. A short lead-time on products is fine but long lead-times may put customers off.
In general a company wants to set it's price at the highest point it can to sell the products it can manufacture. No point setting a low price and selling more than you can make and no point setting it so high you have unused production capacity. I would say the current price point, or possibly slightly higher is this point for Apple, not lower.
You’re absolutely right. I’m not sure which way they will go but I think it’s a toss up at this point. If they want maximum market penetration for Apple Silicon it would make sense for them to lower prices slightly before raising them again with redesigns. That’s assuming the MacBook Pro, as used in the example, keeps the same design, as rumoured.
I imagine they would have a lot better control over their supply with making their own chips too. Right now they are limited by Intel. They’ve been making their own chips for 10 years at this point and besides the first few weeks iPhones and iPads never have shortages. Macs sell nowhere near the volume that iPhones do each year so I don’t think it would be too big of a demand that they can’t meet it.
Apple's margins have typically been in the low 40% range. for a $1000 laptop, their all-in (includes shipping. warehousing, etc.) cost is $600. Of that $200 is Intel CPU, with about $50 for the support chipset from Intel, so Intel makes up $250 of the $600, leaving $350 in non-Intel costs, and $20 for the 16GB of RAM. Lets be generous and say that the Apple SoC costs $100 (includes the 16GB of RAM, replaces Intel CPU and chipset). This makes the cost now $430. At $750 selling price, they can maintain their 40% profit margin with the AS SoC. At $860, they can make a 50% profit margin.
However, this doesn't take into account a number of things. The Apple SoC will include other things that are on the logic board of the Intel laptops, like the T2 chip, like a lot of glue logic, passive components that go between ICs, etc., but are hard to put a value on. Those costs are very real, and will be taken off the logic board, but it is hard to pin the value. I would think there is probably $10-$15 for those components. There will also be a reduction in logic board manufacturing cost, as there will be a reduction in manufacturing costs (it takes less time to assemble a board with fewer components, even for the massive SMD pick and place machines). The total savings would be on the order of $17-$20 combined for the reduced parts count and manufacting time reduction. With all of this taken into consideration, at 40% margin, you are looking at a $720 unit, or $820 at 50% margin.
I can easily see the entry level Mac being sold at $799-$899, even with 16GB of base RAM.
Also, Apple doesn't make Macs: FoxCon does. Apple just orders whatever quantity they need, and its up to FoxCon to deliver. If Apple wants more Macs, they order more Macs from FoxCon, and it is up to FoxCon to figure out how to deliver them. If there are no supply issues (AS SoCs, flash or RAM modules, etc.) and Apple respects Foxcon's lead times, system volume is not going to be an issue. I am using Foxcon as a stand in for any contract manufacturer that Apple has a relationship wiith. It is also possible that Apple could bring on a second contract manufacturer if needed.
However, this doesn't take into account a number of things. The Apple SoC will include other things that are on the logic board of the Intel laptops, like the T2 chip, like a lot of glue logic, passive components that go between ICs, etc., but are hard to put a value on. Those costs are very real, and will be taken off the logic board, but it is hard to pin the value. I would think there is probably $10-$15 for those components. There will also be a reduction in logic board manufacturing cost, as there will be a reduction in manufacturing costs (it takes less time to assemble a board with fewer components, even for the massive SMD pick and place machines). The total savings would be on the order of $17-$20 combined for the reduced parts count and manufacting time reduction. With all of this taken into consideration, at 40% margin, you are looking at a $720 unit, or $820 at 50% margin.
I can easily see the entry level Mac being sold at $799-$899, even with 16GB of base RAM.
Also, Apple doesn't make Macs: FoxCon does. Apple just orders whatever quantity they need, and its up to FoxCon to deliver. If Apple wants more Macs, they order more Macs from FoxCon, and it is up to FoxCon to figure out how to deliver them. If there are no supply issues (AS SoCs, flash or RAM modules, etc.) and Apple respects Foxcon's lead times, system volume is not going to be an issue. I am using Foxcon as a stand in for any contract manufacturer that Apple has a relationship wiith. It is also possible that Apple could bring on a second contract manufacturer if needed.
Did you factor in the R&D cost to get MacOS working on ASi and everything surrounding that. You can be sure that cost is being passed down to the final customer.
I really think Apple is thinking long term here. If I was Apple, I'd be asking - if I can become a desktop/laptop chip builder, why can't I also become a server chip builder? And to do that, they might want to have a lot more developers on Apple Silicon so it's a logical extension to put those chips in cloud servers. If I was a 2 trillion dollar company, that's where I'd have my sights. (Of course, I don't think cloud server buyers will go for a T2 chip as it's currently implemented)
Apple currently has (along with AMD) an advantage over Intel. Will it last? I don't think they can be sure of that. And If I have what only may be a temporary advantage over Intel, I'd want to attack them with that advantage while I can. To me, that would mean that Apple wouldn't push their margins higher - they'd probably keep them 'good enough' - good enough to sell enough laptops/desktops to eat up all that TSMC availability - especially when more became available because TSMC booted Huawei.
Apple currently has (along with AMD) an advantage over Intel. Will it last? I don't think they can be sure of that. And If I have what only may be a temporary advantage over Intel, I'd want to attack them with that advantage while I can. To me, that would mean that Apple wouldn't push their margins higher - they'd probably keep them 'good enough' - good enough to sell enough laptops/desktops to eat up all that TSMC availability - especially when more became available because TSMC booted Huawei.
My (non-professional) iTunes library alone is currently at 194 GB, even without any significant video files (it's mostly music and audiobooks). And I like it to all be locally on my computer, as opposed to offloaded onto an external drive.
Others may have smaller iTunes libraries than me, but more photos and videos.
Economies of scale could apply to iPhone/iPad chips repurposed for the Air. But the volumes of the higher-end AS chips in the MBP, iMac, and Mac Pro will be lower than those of their Intel counterparts. So to the extent it cost Apple less to make these chips than to buy them from Intel, it will be for other reasons, not economies of scale.
[Volumes may be close to Intel for the MBP chips since, while Apple is only a small fraction of the total laptop market, they are a much larger fraction of the high-end laptop market.]
Last edited:
There are various R&D costs associated with bringing in the AS Macs. The R&D costs for the SoCs themselves don't get paid by the Mac line, but by the entire Apple lineup, which includes the iPhone, as much of the SoC's building blocks, like CPU, GPU, Memory Interface, Secure Enclave (and the rest of what is provided by the T2 chip on the Intel Macs). So, on the hardware side, there will be some R&D for Mac Specific building blocks (USB5/TB4, Ethernet port. etc.), but nothing like a full blown from the groung up SoC development.
On the software side, you are assuming that Big Sur is the first version to run on AS SoCs. It has been running for years, and the costs to get it running on AS have been paid for, over the years, by the same way that the Intel MacOS version have been paid for. Conservatively, I think MacOS has been on AS SoCs has been working since the First AS SoC (A6?).
On the software side, you are assuming that Big Sur is the first version to run on AS SoCs. It has been running for years, and the costs to get it running on AS have been paid for, over the years, by the same way that the Intel MacOS version have been paid for. Conservatively, I think MacOS has been on AS SoCs has been working since the First AS SoC (A6?).
Last edited:
In this case, I don't think so. When they price new models high, I think the intention is to price some people out of the market on that model so that anticipated demand is close enough to anticipated manufacturing capacity. I don't think they'll price these high though, because driving people toward the older ones makes it more difficult to pull software support without a backlash.
Apple almost always has a second contractor for every part they buy or product they make. Pegatron (I think) usually acts as a backup to Foxcon doing lower volume but there to make sure there is always some supply coming in just in case. Apple/Tim Cook is very good at logistics and they don't seem to mind paying the costs of covering their asses. Other companies usually risk missing launch deadlines or supply targets.
Apple plays the long game. The costs of these things are spread out over the life of them. It may be that Apple will scale an MBP chip knowing the excess will eventually be cheap enough to go into next years MacBook Air or Mac Mini. Look at the way they've kept iPhone chips in production to use in different models. The A12X/Z has either been built for two years or they made a stay of them two years ago and saved the ones that could run the extra core for the Z until they needed them.
On the one hand they will be juggling the capacity they can get from TSMC, on the other they will likely help TSMC build out more capacity when they need it.
At least one analyst believes Apple plan to push services and do so by dropping margins on hardware. His evidence was the iPhone SE being so cheap while having the same CPU as the iPhone 11. If he's right and Apple slash the prices on lower end Macs to expand their user base then economy of scale won't be a problem. On the other hand maybe they used the A13 in the SE because they couldn't build three different iPhone chips on top of what they need for Macs. Time will tell. Or at least time will drop more hints.
iOS was based on the core of MacOS from the start so MacOS will have been running on ARM CPUs since iOS began development. Or maybe iOS development was born out of running MacOS on ARM CPUs. Maybe Apple have been running MacOS on everything since 2000.
Apple should at least reduce the price of base Mac Mini to something like $599 or $699. That device in that form factor has huge potential in my opinion but currently it's being reduced to a niche product thanks to its price tag.
Interesting. I'm expecting we'll go back to the original $499 Mac mini but maybe I'm too optimistic.
Edit: assuming they do reduce prices on the mini of course.
Edit: assuming they do reduce prices on the mini of course.
Last edited:
This is good news:
www.anandtech.com
The more efficiently TSMC can churn chips out, the more options Apple will have to price an ARM macbook more attractively in an attempt to gain market share.
Maybe Intel will soon hop onto TSMC too
‘Better Yield on 5nm than 7nm’: TSMC Update on Defect Rates for N5
The more efficiently TSMC can churn chips out, the more options Apple will have to price an ARM macbook more attractively in an attempt to gain market share.
Maybe Intel will soon hop onto TSMC too
What I'm hoping is that the price ceiling will come down a bit on the higher end machines. They are quickly spiraling out of control. But I also think they won't offer many variants to choose from. You might only get good and best, no better in the middle for a lot of products.
This is good news:
‘Better Yield on 5nm than 7nm’: TSMC Update on Defect Rates for N5
The more efficiently TSMC can churn chips out, the more options Apple will have to price an ARM macbook more attractively in an attempt to gain market share.
Maybe Intel will soon hop onto TSMC too
The TSMC defect curve is actually better on the 5nm process than it was for the 7nm process for the same time period. TSMC has said that they don't expect the final defect rate to be any worse for 5nm than it is for 7nm. In theory, it will result in lower costs for SoCs built around the 5nm parts, and increased volumes as well, so the current supply constraints imposed by a lack of Intel CPUs will no longer be a consideration/
Market share is not a big consideration for Apple. I don't think they will be chasing it, but they will take it, if it does increase.
I think they do care about market share now. They haven't until now but they need to expand their base further to increase services revenue further. As for high-end, now that people buying RAM upgrades are a captive audience who cannot go elsewhere, Apple really ought to relent a bit on the RAM prices. This would help a lot with those spiralling top end costs.
Question: do you think AS Mac base models will still have 8GB RAM? I was hoping for a switch to 16 but now the new 27” iMac still has 8, would be strange if the new 24” would suddenly get 16GB.