One of Apple's cost-cutting secrets: using downgraded flagship chips for entry-level market

Source: Global Market Report

Apple has long been known for its premium-priced products, but at a time when most consumer electronics manufacturers are struggling with rising costs, the company has managed to achieve significant revenue growth through its affordable device business.

One of its key secrets to success is utilizing slightly defective chips that were originally destined for disposal.

This strategy is showcased in the new MacBook Neo, priced at $599. Initial market data indicates this product is highly favored by consumers.

This model is equipped with the A18 Pro chip, which was first used in the iPhone 16 Pro two years ago. There is one core difference: the MacBook Neo version features a five-core GPU, one core fewer than the 2024 Apple phone version. This means Apple makes use of A18 Pro chips with some defective cores by repurposing them.

Manufacturers can disable faulty cores within a chip, while the remaining fully functional performance is sufficient to smoothly power various affordable terminal devices. This entry-level laptop is just such a carrier for these chips, rather than being reserved for the top-tier flagship phones.

This is the latest manifestation of Apple continuing the traditional operating strategies of the chip industry: classifying processors with different performance levels and selling them as distinct tiers, much like grading eggs, fuel, diamonds, or hotel rooms. This fully capitalizes on mid-range and sub-premium chips, significantly boosting profits.

Industry analysts note that this approach, which was originally conceived to utilize idle mobile chips and reduce costs, has now become a core philosophy of Apple’s product design. Relying on this model, Apple is able to segment its product matrix precisely, achieving an operational efficiency that most middle-sized and smaller competitors cannot match.

Tim Culpan, an industry analyst who has long studied Apple’s chip supply chain orders, stated: “Making full use of chips that don't meet flagship specifications not only saves costs and reduces material waste, but also cuts R&D and production time, while reaching more consumer groups who were previously out of reach.”