Apple is Reportedly Facing a 'Massive Dilemma' With the MacBook Neo

[MacRumors]

The all-new MacBook Neo has been such a hit that Apple is facing a "massive dilemma," according to Taiwan-based tech columnist and former Bloomberg reporter Tim Culpan.

In the iPhone 16 Pro models, the A18 Pro chip has a 6-core GPU. During the chip manufacturing process, however, sometimes a CPU or GPU core can turn out to be faulty. Rather than discarding the leftover A18 Pro chips with only a 5-core GPU, Apple opted to use them in the MacBook Neo, as a way of optimizing its supply chain and costs.

These so-called "binned" chips with a 5-core GPU are effectively "free" to Apple, given that they otherwise would have been discarded.

Herein lies the dilemma.

In the latest edition of his Culpium newsletter today, Culpan said the MacBook Neo is selling so well that Apple's supply of the binned A18 Pro chips with a 5-core GPU will "run out" before the company is able to fully satisfy demand for the laptop.

Apple's initial plan was to have suppliers build around five to six million MacBook Neo units before ceasing production of the model with the A18 Pro chip, he said, but it sounds like demand is so strong that Apple might run out of A18 Pro chips to put in the MacBook Neo before the second-generation MacBook Neo with an A19 Pro chip is ready next year.

Apple is unlikely to mark the MacBook Neo as temporarily sold out, so it may be forced to take action, but profit margins might be affected.

A18 Pro chips are manufactured with TSMC's second-generation 3nm process, known as N3E, and Culpan said TSMC's N3E production lines are currently operating at maximum capacity. As a result, he said that Apple may have to pay a premium to restart A18 Pro chip production for the MacBook Neo, which would lower its profit margins.

Apple would have to disable a GPU core on these chips to ensure that they have only a 5-core GPU, like all other MacBook Neo units sold to date.

Alternatively, Culpan said that Apple could reallocate some of its chip production that was originally planned for other devices, but he said the cost would still be higher than what it paid for its initial batch of A18 Pro chips.

Culpan speculated that Apple could also opt to discontinue the $599 model with 256GB of storage, leaving the $699 model with 512GB of storage and a Touch ID button as the only configuration available. This is unlikely to happen any time soon, in our view, given how heavily Apple has been promoting the MacBook Neo's affordability.

Apple might also be able to move up the release of a MacBook Neo with the iPhone 17 Pro's A19 Pro chip, but that too would be a costlier option, at least until the company achieves a sufficient stockpile of binned A19 Pro chips with a 5-core GPU.

In any case, Apple could opt to keep the starting price of current and future MacBook Neo models at $599 and simply accept lower profit margins on the laptop, especially given that it attracts customers to the macOS and broader Apple ecosystem.

Two weeks after MacBook Neo pre-orders began last month, Apple's CEO Tim Cook said the Mac had its "best launch week ever for first-time Mac customers," suggesting that the MacBook Neo has been a massive hit. This news should not come as much of a surprise, as the MacBook Neo is the most affordable MacBook ever released.

All configurations of the MacBook Neo currently have a 2-3 week delivery estimate on Apple's online store in the U.S. and many other countries.

Article Link: Apple is Reportedly Facing a 'Massive Dilemma' With the MacBook Neo

 

[Christopher Pelham]

Isn't that a good problem to have though? Yes, the margin might drop, but the overall profit would increase, right?

 

[iMac The Knife]

Well, now we know why they were able to get the price point so low on these. Here, have a discarded chip in your machine that we paid $0 for. We think you're going to love it!

 

[RealKeishav]

Suffering from success

 

[boswald]

On one hand, I'm disappointed they're cramming "faulty" chips into these and selling them for hundreds, but on the other I'm happy to see so many people experiencing macOS for the first time. I hope Tim can handle a slight bump to profit margins and get it sorted out.

 

[DrJR]

Compromise surprise!

 

[BeerDrinkerDan]

Well, now we know why they were able to get the price point so low on these. Here, have a discarded chip in your machine that we paid $0 for. We think you're going to love it!

Seems pretty smart. Like making croutons from stale bread. And people do seem to love the Neo.

-bdd

 

[Chopper3]

When a chip is binned what actually happens is that the chip has failed one or more tests - an automated decision-tree then chooses what happens to that chip, if it's decided to 'kill' a core or feature then that is done, irreversibly, to the chip by disabling fully the offending component. This can be done to perfectly healthy chips, and this route is routinely taken as yields increase over time during the production-run of a particular chip. So they don't need to 'run out' of Neo-grade 18 Pros, they can just take otherwise perfect chips and set them to behave at the same level as the 'broken' ones. It's that simple.

 

[MaaK]

This shows again that Apple lost sight of what users want. They should have predicted the demand.
Underlines that they only want to sell their old parts and don’t care about users being price-conscious. On the other hand they over-produce iPhone Air and will do the same with Fold/Ultra and forget about the current economy which leads people to be more concerned about the prices of devices.

 

[goodcow]

Oh no, Tim might have to lose 1-2% of margin.

 

[Mojohanna32]

Isn't that a good problem to have though? Yes, the margin might drop, but the overall profit would increase, right?

At some point you have to wonder if the hardware is the razor for Apple and the services are the razor blades. However, I am not sure how many service dollars are spent on a laptop vs. an iPad or iPhone. The other question becomes how many NEW TO APPLE users they are bringing into the fold that may choose to upgrade to a MacBook Air, an iPad or move out of an Andriod phone..... These type of actions would make a drop in margin more palatable.

 

[Chopper3]

Seems pretty smart. Like making croutons from stale bread. And people do seem to love the Neo.

Binning is a huge part of chip manufacturing and has been since at least the 1970s - it's why we have things like the Intel i3/i5/i7/i9 system, or the AMD equivalents.

 

[techyOS]

“i’ve won, but at what cost”

 

[sw1tcher]

Alternative option is to just put a 6 core-GPU A18 Pro chip in them, charge something like $50 more and call it the Macbook Neo Plus / Neo Pro

 

[bluecoast]

Maybe we'll start to see some units unbinned then - presumably the 512 GB ones.

Not that it will make a massive difference and those who have the binned version shouldn't feel short changed because the 'upgrade' will be so minor.

Amazing it's been such a success - but why wouldn't it? It blows any comparable PC out of the water at these two price points.

And has anyone here used Windows 11 lately?

It makes the furure over Liquid Glass seem like a storm in a tea cup.

Windows 11 is the poster child for bad UX.

 

[yuvaldv1]

Deliberately handicapping the chip sounds crazy to me, though Apple can't just give people different chips in the same laptop model.

 

[Chopper3]

Maybe we'll start to see some units unbinned then - presumably the 512 GB ones.

Not that it will make a massive difference and those who have the binned version shouldn't feel short changed because the 'upgrade' will be so minor.

Amazing it's been such a success - but why wouldn't it? It blows any comparable PC out of the water at these two price points.

And has anyone here used Windows 11 lately?

It makes the furure over Liquid Glass seem like a storm in a tea cup.

Windows 11 is the poster child for bad UX.

No the RAM and storage is added after the CPU tests and binning

 

[mlayer]

Eventually this was going to happen with one of the products with a binned chip if it proved successful. Prior to the Neo, Apple had the A17 Pro in the iPhone 15 Pro and the iPad mini that was released a year later. That gave Apple time to stockpile those SoCs. Regardless it’s a good problem to have.

 

[turbineseaplane]

Macbook Neo Pro time!

 

[WarmWinterHat]

Deliberately handicapping the chip sounds crazy to me, though Apple can't just give people different chips in the same laptop model.

It's been done forever. I recall buying a Slot-A 700mhz AMD processor years ago, but when I later pulled off the heatsink, it was a 900mhz chip.

 

[Astuces iOS]

Let's go, end with this Neo !

 

[code-m]

On one hand, I'm disappointed they're cramming "faulty" chips into these and selling them for hundreds, but on the other I'm happy to see so many people experiencing macOS for the first time. I hope Tim can handle a slight bump to profit margins and get it sorted out.

Wouldn’t it even itself out. Installing binned chips at $0 cost means the cost to produce these for future shipped products will lower or equalize profit margins.

Seems Tim got greedy but it would be short-lived for less greed but hey it saves the environment from wasted binned chips and more people get to experience macOS. Effectively boosting macOS hardware sales in the future and giving a nice bump to the stock price due to demand, basically a win:win.

 

[Mojohanna32]

This shows again that Apple lost sight of what users want. They should have predicted the demand.
Underlines that they only want to sell their old parts and don’t care about users being price-conscious. On the other hand they over-produce iPhone Air and will do the same with Fold/Ultra and forget about the current economy which leads people to be more concerned about the prices of devices.

any "prediction" as you call it is just an estimate. It's impossible to nail down this type of demand and have it be exact or even close to exact.

 

[RealKeishav]

Oh no, Tim might have to lose 1-2% of margin.

Butterfly effect

 

[code-m]

Oh no, Tim might have to lose 1-2% of margin.

It may push some Neo potential buyers to consider buying the Air, maybe it was all planned from the start. 😉