Apple's chip "personnel panic"

Apple's self-designed chip design began shortly after the launch of the first iPhone in 2007, but it wasn't until the A4 processor of the iPhone 4 was released in 2010 that Apple officially embarked on the path of self-designed chips. With the emergence of the A6 processor, Apple's iPhone was already a dominating presence. Then in 2013, Apple released the A7 with a new 64-bit design, using Samsung's 28nm process technology, opening the door for 64-bit era of mobile processors.

Subsequent generations such as A8, A9, A10 further improved the number of cores and process technology, ranging from 20nm to 16nm, and performance continued to increase. The A11 was then known as a performance monster. A12-A16 also followed the principle of using the latest and most advanced chip process technology. However, in the recent developments, it can be observed that the progress of the next generation of self-designed chips is gradually slowing down.

Many people attribute this result to the frequent personnel turnover at Apple in the past two years.

01

Since 2019, it is appropriate to describe the recent talent drain situation of Apple as "misfortunes never come singly."

In February 2019, Gerard Williams III, the chief chip designer responsible for the development of A7 to A12X chips at Apple, left the company. He was the chief architect of the iPhone's previous generations of core processors and the M1 series. At the same time, he took several key chip engineers with him. He subsequently co-founded a new company called Nuvia, which primarily develops processors for data centers.

In the same year, Apple brought in Mike Filippo, the chief architect at ARM, to serve as the chief architect of Apple's self-developed M1 chip, taking over Gerard Williams III's work. Then, earlier this year, Mike Filippo left for Microsoft to work on processor development.

In December 2021, Jeff Wilcox, the director of M1 chip design who had been with Apple for over 8 years, announced his departure and returned to Intel. Afterwards, Jeff Wilcox publicly took on the role of CTO of the client SoC development team at Intel.
In addition to these three major changes, Meta, also involved in the metaverse, has engaged in fierce competition with Apple in the fields of augmented reality and virtual reality headsets and smartwatches. In 2021, Meta poached approximately 100 engineers from Apple's augmented reality, artificial intelligence, software, and hardware departments.

Recently, according to the foreign media outlet The Information, Apple's chip division is experiencing a serious talent drain. Engineers and executives are leaving one after another in search of better opportunities and working conditions. Johnny Srouji, Apple's Senior Vice President of Hardware Technologies, expressed concern over this issue. To prevent talent drain, Apple has given internal speeches more than once, emphasizing the risks of working for startups, and highlighting the stability and high returns that can be guaranteed at Apple. In weighing the pros and cons, they hope to retain more executives and engineers.

02

After the release of iPhone 14 in 2022, the A16 chip has been criticized in multiple rounds. According to the GB5 data from GeekPark, compared with the A15, the CPU single-core performance of the A16 chip has improved from 1741 to 1882, an increase of about 8.1%, and the multi-core performance has only improved by about 10%. The peak GPU performance has not improved, only a slight improvement in energy efficiency. Although the CPU advantage of the A16 chip is still ahead of flagship Android phones, especially in single-core performance, its advantage in GPU is no longer there.

In addition, according to foreign reports, the A16 Bionic chip, originally planned to be used in the iPhone 14 Pro series, will have ray tracing functionality. This plan was feasible in the initial software simulation tests, but encountered unresolved issues in the later stages of chip development: power consumption exceeded expectations. It is expected that Apple's A17 chip, which will adopt TSMC's 3nm process, can reduce power consumption and solve heat dissipation issues, while adding ray tracing technology to the GPU core.

Due to the slowdown in the development of A-series chips, the performance improvement of Apple processors in recent years has been very small. Each improvement is mainly due to the improvement of chip manufacturing processes, rather than Apple's chip design. Dylan Patel, Chief Analyst at SemiAnalysis, said, 'Since Gerard Williams III left, Apple's processor performance growth has significantly slowed down.'

In mid-2021, Intel publicly revealed its processor roadmap for the next five years, as well as new chip and packaging technologies, during an online live event. Intel claimed that it will regain its dominant position in the processor field by 2025. Intel recruited Apple's chip director, Jeff Wilcox, to be responsible for its design engineering, which also shows Intel's urgent attitude toward regaining its dominant position in the processor field.

At the beginning of 2021, Nuvia was acquired by Qualcomm for a price of 1.4 billion US dollars, along with the talent resources of Nuvia's three co-founders and more than 100 Apple engineers, including Gerard Williams III, the "Chief Architect" of Apple's M1. With Nuvia, Qualcomm has greatly strengthened its design capabilities for ARM self-developed architecture. Currently, the performance gap between Apple's A-series processors and Qualcomm Snapdragon processors has been getting smaller, with the Qualcomm Snapdragon 8 Gen 2 even catching up to Apple in multi-core performance.

Although employee turnover is one of the reasons for the slower pace of Apple's self-developed A-series chips, there are still many other influencing factors.

03

When introducing the A15 chip, Apple said: The true uniqueness of Apple's design is that we don't simply create a powerful chip and then build various functions around it. Instead, we start with inspiration and envision a wonderful user experience for you, and then work together to make it a reality.

Nowadays, the scale of the A-series chips has reached a certain level. Taking the A15 as an example, it has surpassed the competition in terms of CPU and GPU, reaching a level of 30%+ improvement. Further research and development are limited by the current technological level, and in addition to the chip itself, there is also a strong demand for performance improvement and continued advancement in software requirements for Apple phones. In comparison, better user interface interaction and stronger intelligence can bring greater returns than the continuous improvement of chip power.

The reason why Apple's A-series processors can lead the Android camp by one or two generations is, on the one hand, because of Apple's strong chip design capability, and on the other hand, Apple has always used the latest and most advanced chip manufacturing process. With the support of Taiwan Semiconductor's manufacturing, Apple's self-developed chips have made great strides and gained more autonomy in the supply chain. However, as Taiwan Semiconductor's manufacturing process enters 3nm, the pace of process innovation is slowing down, and the manufacturing prices are soaring, reaching as high as 0.02 million US dollars. Currently, only Apple can afford such an expensive new technology. Continuing in this way means that Apple will have to increase its product costs, further squeezing profit margins. This is obviously not in line with Apple's pursuit of maximizing profits.

Since the pace of Apple's self-developed chips has slowed down, will there be some changes in its chip business in the future?

04

At the beginning of 2021, Apple announced that its hardware engineering chief, Dan Riccio, would take on a new position, and it has been verified that the key area will be AR/VR headsets. Recently, Yahoo Finance analyst Dan Howley stated in an interview that Apple will launch VR/AR headsets in the second half of 2023. He stated that Apple's headset will be one of the most advanced in the industry and should outperform Meta's Oculus 2 and the upcoming PlayStation VR2 from Sony. He mentioned that compared to the concept of the metaverse, Apple is more inclined to provide an immersive AR/VR experience.

Earlier, Tianfeng Securities analyst Ming-Chi Kuo released a report stating that Apple's AR headset will be equipped with a "desktop-level" chip comparable to the M1 and a 4K Micro OLED display from Sony. The goal is to replace the iPhone within 10 years, with expected shipments exceeding 1 billion units.

In 2021 alone, Apple obtained 11 patents related to AR headsets, and since 2013, Apple has successively acquired more than ten companies related to the AR field, involving sensors, AR software, AR content ecosystem, and even AR lenses. It is evident that Apple has been laying out in the AR/VR headset field for a long time and has high expectations.

Apple may slow down the pace of iPhone chip improvements and focus entirely on Mac chips.

In the past year and a half, Apple has launched five major types of Mac chips, from M1 to M1 Ultra to M2. But Apple's senior leak expert Mark Gurman predicts that in the next year or so, Apple will release more products, including M2 Pro, M2 Max, M2 Ultra, and M3.

The M series chips use ARM architecture. According to the latest research from data statistics institution Strategy Analytics, in the 2021 ARM architecture laptop processor market, Apple alone took almost 90% of the revenue with the M1 series. The M1 chip is not only used in Macs but also in the 2021 iPad Pro, with performance more than 50% stronger than the previous generation, breaking the speed records for iPads.

Apple is now taking steps to integrate its chip business, including installing Mac chips in iPads and the upcoming Mixed Reality (MR) headset. For example, Apple's first AR/VR headset may use the flagship M2 chip, supporting 16GB of memory. The company will also use Apple Watch chips in HomePods. This means that there will no longer be a need to develop dedicated chips for iPads, headsets, and HomePods, and the application range of the M series chips will be broader.

05

Recently, the specifications of the A17 chip have been exposed. The Apple A17 Bionic chip will be produced using Taiwan Semiconductor's latest 3nm process and will integrate a Qualcomm 5G chip. It is said that due to the departure of Apple's chief chip designer, the performance and architecture of the Apple A17 Bionic chip will mainly be modified from the Apple A16 Bionic, still using a 6-core CPU architecture, and focusing more on energy optimization and battery life. In other words, the A17 will not have significant performance enhancements, but will have better energy efficiency.

Apple has a great advantage in the mobile ecosystem field, relying on the powerful performance and power consumption ratio of the M-Series and A-Series chips, as well as Apple's unique interconnect ecology. It is still unknown whether the A17 will be surpassed by Qualcomm in the future. However, the multi-billion-dollar patent settlement agreement between Apple and Qualcomm is also about to expire. In 2023, a century-long patent litigation war between Apple and Qualcomm is expected to begin, which is also a cause for concern for Apple.