MacBook Neo's Success Is Apple's Problem: Don't Want to Miss Hype, But Boosting Production for Chips Will Wipe Out Profits
According to IT journalist and former Bloomberg columnist Tim Culpan, Apple faces a major challenge with its wildly popular MacBook Neo. The company is reportedly negotiating with suppliers to decide whether to risk missing out on high demand by letting component stocks deplete, or to increase production at the cost of its profit margins.
The A18 Pro Chip Conundrum
The MacBook Neo uses the same A18 Pro chip found in the iPhone 16 Pro. However, as Stratechery founder Ben Thompson points out, the laptop version has a five-core GPU, while the smartphone version has a six-core one. This suggests Apple is cleverly repurposing chips with one defective GPU core that other manufacturers would typically discard.
Another company would have written them off, but Apple is a 'master of recycling'.
Supply vs. Profitability
Due to the Neo's popularity, Apple might exhaust its supply of these repurposed chips long before meeting current demand or launching the updated A19 Pro model expected in 2027. The initial production run, split between Quanta and Foxconn, was reportedly capped at just 5-6 million units.
For Apple's leadership, missing out on the sales boom is a 'bleak prospect.' However, ramping up production would mean ordering new, full-priced chips that are already scarce. This move would likely eliminate the profit margin on the $599 laptop, which currently benefits from using chips that were acquired at virtually no cost. This challenge is compounded by the rising costs of aluminum and memory needed for a larger production run.
Potential Compromises
- Discontinue the base model and sell only the higher-margin $699 version with 512GB of storage.
- Release a new, premium-priced color option to boost revenue.
- Bundle new models with a generous amount of iCloud storage to justify a higher price point.