Apple Heaps Pressure on Rivals with Upgraded Silicon and Macs

If you were to ask people on the high street what products Apple makes, most would be able to list off its most popular devices without hesitation: iPhone, iPad, Mac, Apple Watch and AirPods. Many would probably identify services like Apple Music too, as Apple continues to expand its play in subscriptions.

But we bet that few would mention silicon chips, even though this is arguably Apple’s most important area of investment. In fact, its spending on custom silicon places it in the top 12 globally, and we’ve predicted that it will surpass $10 billion annually by 2025. Its decades-long journey to design its own chips has proven extremely valuable, with its semiconductors now at the heart of its most successful products.

And today, in an understated announcement without the fanfare of a major launch event, Apple quietly unveiled an update to its Mac line of computers powered by upgraded M2 processors known as the M2 Pro and M2 Max. It’s a move that underscores the importance of Apple’s deep investment in silicon and shows how central it is to its entire approach to computing.

The announcement debuts Mac products including updates to the Mac mini, powered by the M2 or M2 Pro chipsets and available at a range of prices — the most affordable device is priced at $600. Apple also launched 14- and 16-inch MacBook Pro models using the M2 Pro and M2 Max chips and starting from $2,000.

Apple claims the new M2 Pro and Ultra chips deliver significant performance gains over its current M1 and M2 line-up, further widening the gap with rivals, most notably Intel. In the press release for the announcement, Apple listed several performance metrics highlighting the strides it has made since it started deploying its own silicon, and some of these figures are impressive. For example, it says that the Mac mini with the M2 Pro chip is 14 times faster than the best Intel-powered model — a staggering leap forward.

The upgraded Mac mini also signals a change in Apple’s approach to its top-of-the-range desktop computers. Historically the iMac Pro was its flagship all-in-one product. Apple now appears to be transitioning to a modular approach that encourages customers to pair a Mac mini (or Mac Studio) with its 27-inch Studio Display monitor if they want a similar experience. This gives users a more flexible upgrade path that lets them swap out the Mac mini when they need a more powerful computer, rather than having to replace the entire system. This modularity will have long-term benefits for upgrade cycles and could be seen as a step forward from an environmental perspective too.

Overall, we see the announcement of the M2 Pro and M2 Ultra processors as a clear attempt to get users of older Intel-powered Mac devices to upgrade to a new machine. The performance improvements and the lower price of the Mac mini in particular will tempt many to upgrade.

Beyond existing users, Apple continues to court new customers. Growing adoption of the iPhone and other Apple products has strengthened appetite for Mac products substantially. Those who would have previously gravitated toward a Windows-powered PC are now willing to consider a MacBook given their greater familiarity with Apple software and the benefits of having a range of products from the same ecosystem.

This is undoubtedly a worry for PC-makers, particularly in an unfavourable macroeconomic environment. Intel’s poor 3Q22 results were partly pinned on softening demand in the consumer PC market, and with 4Q22 announcements just around the corner, it will be fascinating to see how the segment is shaping up for this year.

Reflecting on the announcement, the biggest conclusion we can draw is that Apple has taken control of its destiny when it comes to the Mac product line. It’s no longer dependent on other chipset suppliers, most notably Intel, and it will welcome greater control of its supply chain after a few tough years of semiconductor shortages.

By introducing its latest M series chips, Apple also now has a common architecture for its range of Mac devices. Of course, this raises the bar for Apple itself, as it now needs to ensure it can keep up the pace of delivery for its custom semiconductors. So far, it seems to have been able to maintain this for silicon platforms across its portfolio. The focus now shifts back to the rest of the market to see how it responds.