Apple’s impressive stock price over the last couple of decades has been propelled by its groundbreaking consumer tech, beginning with the iPod and iMac, then progressing to the iPhone and iPad, and more recently to the Apple Watch and AirPods. But beyond the iconic gadgets, Apple is harnessing its technological expertise to design custom chips for its popular products in a nondescript Silicon Valley room filled with buzzing machines and engineers donning lab coats.
The development of homegrown semiconductors began with the iPhone 4 in 2010, and the company recently ended its long-standing dependence on Intel by incorporating their own silicon into all new Mac computers in 2023. This shift represents a significant transformation for Apple’s product development. As John Ternus, who oversees hardware engineering at Apple, states, “And top of the list, of course, is our silicon.”
While this change has opened up new opportunities for Apple, it has also exposed them to unforeseen risks. Their most advanced silicon is primarily manufactured by one vendor, Taiwan Semiconductor Manufacturing Company, and the smartphone market is still recovering from a steep sales decline. In light of these challenges, Apple is wholeheartedly embracing the intensive business of custom semiconductor development, an initiative echoed by tech giants like Amazon, Google, Microsoft, and Tesla.
According to Johny Srouji, Apple’s head of silicon, the company has a streamlined approach to chip design, focusing on product optimization and scalability. Apple deviates from conventional chipmakers by not producing chips for other companies, a move that aligns with the company’s desire to exert maximum control over its entire product line. Apple’s remarkable progress in chip development culminated in the redefining of chip architecture in 2020 with the introduction of its proprietary M1 chip for Macbooks, signaling a new era for the semiconductor industry.
As Apple forges ahead with its chip development, the company has leveraged its burgeoning team of engineers across global facilities to design a diversified portfolio of chips supporting various products. Moreover, Apple’s pursuit of semiconductor innovation is exemplified by its newest 3-nanometer A17 Pro chip, which boasts groundbreaking capabilities in rendering and computational photography. As Kaiann Drance, the head of iPhone marketing, points out, the product has initiated the development of iPhone-native versions from major game developers, solidifying Apple’s foothold in the semiconductor industry.
In tackling the inherent challenges of creating custom chips, Apple remains steadfast in its endeavors, having positioned itself as a leader in the industry. Since the debut of its first custom chip 13 years ago, Apple has led the charge as an unconventional non-chip company, revolutionizing the cutthroat semiconductor market. This achievement underscores Apple’s significant role in reshaping the trajectory of technology and innovation.
