Apple’s move to drop Intel chips in Macs in favor of Apple-designed custom ARM-based silicon could save the company $2.2 billion per year.
Due to years of failure by a chip manufacturer, Apple finally made the move to switch to internal custom silicon for their computers. In another crushing blow to Intel, Macs have utilized chips from the semiconductor giant for 15 years now. Outside the benefit of better performance and lower power consumption, Apple stands to generate higher margins, boosting the bullish margin thesis on the company. The move is a no-brainer and helps support a bullish investment thesis on the stock despite the recent surge to all-time highs of $373.
Apple desktop Macs with custom chips will have equal or better performance than Intel with the power consumption of a typical laptop… Normally, a company would have a hard time developing a special chip to achieve better performance and costs when the sector leader spends billions more on research and development, but Intel left the door open with year after year of failing to move to 10nm chips.
On top of the expected performance improvements for Apple, the move is a big benefit with billions in cost savings. Trefis estimates that about 20 million Mac shipments in 2022 will lead to $2.2 billion in savings for the tech giant… With the combination of custom silicon and a shift to Services with over 60% gross margins, Apple could easily boost gross margins to 41.5% in FY22.
MacDailyNews Take: Increased sales + rising margins = investor love.