Apple reportedly in supply dilemmas amid Neo sales success

Apple is reportedly in talks with suppliers to address a major dilemma posed by the MacBook Neo‘s sales boost.

Essentially, the MacBook Neo is powered by usable leftover A18 chips from the original production run that would have been tossed (and are essentially free for Apple). But the supply of these chips is running low amid the Neo’s sudden success.

Currently, final assembly of the Neo is split between factories in Vietnam and China, with initial plans to build only around five to six million units before calling it a day with the Neo.

Prior to this, Apple was reportedly planning to have suppliers build a new Neo next year, powered by the current-generation leftover A19 chips, according to former Bloomberg columnist Tim Culpan.

Now, suppliers are unsure whether to expect production to continue beyond the original plan.

As Culpan points out, leaving all of the demand on the table is a painful thought for Apple executives, but going back for another round would risk shrinking the profit margins that Apple was enjoying on “effectively free” chips.

Now, Apple could, in theory, pay a premium to TSMC (whose 3nm process the A18 was based on) in order to jump the line and get another batch of the A18 chip. But, as previously mentioned, this would kill profits on the surprisingly cheap laptop.

Despite all of this, I imagine Apple will continue production of the Neo beyond the current A18 chip supply. Taking some notes from the automotive industry, a low-cost model is almost never a profit maker (unless you’re Honda or Toyota), but it does give people a way in to the company and a potential reason to consider other Apple products in the future.

Source: Culpium