Apple's chip lab was made public for the first time: streamlined and efficient, but why can't it handle baseband chips

Highlight the point

1. In 2008, Apple acquired the startup P.A. Semiconductor, since then, has been developing its own chips.

2. In 2010, Apple first equipped the self-developed chip A4 on the iPhone 4, and gradually expanded it to iPad, smart watches and Macs.

3. The Apple chip team has thousands of engineers, scattered in the United States, Israel, Germany, Austria, the United Kingdom, and Japan.

4. Apple chips are known as system-on-chips (SoCs), and currently have multiple series such as A, M, S, H, W, U, and R for different devices.

5. There are still challenges in the development of baseband chips and wireless chips, and it is necessary to rely on Qualcomm.

6. In addition to Apple, giants such as Google, Amazon, Microsoft and Tesla are also developing their own chips.

Tencent Technology News According to foreign media reports, in the past 20 years, Apple's stock price has been soaring, driven by a number of flagship consumer electronic devices. These devices range from the original iPod and iMac to the later iPhone and iPad, and more recently, the Apple Watch smartwatch and AirPods headphones.

But as the most valuable tech giant in the United States, Apple's business isn't just limited to consumer electronics, it has a lot of other things. In a nondescript room at Apple's headquarters in Silicon Valley, hundreds of humming machines and a handful of engineers in lab coats are designing the self-developed chips that power Apple's most popular products.

Pictured: Apple's head of chips, Johnny Sluge (right), leads reporters on a tour of the chip lab

As early as 2010, Apple first equipped its own chip on the iPhone 4. As of this year, all new Mac computers are powered by Apple's own chips, ending the company's 15-year reliance on Intel.

John Ternus, Apple's head of hardware engineering, said: "One of the most profound changes Apple has made over the past 20 years has been developing more technology in-house, starting with the chip, of course. ”

This change also introduces a new set of risks for Apple. Its state-of-the-art chips are mainly manufactured by TSMC. At the same time, smartphones are recovering from a sharp decline in sales, while competitors such as Microsoft are making huge leaps forward in artificial intelligence.

In November, CNBC reporters visited Apple's campus in Cupertino, California, and they were among the first to be allowed to film in the company's chip lab. They had the rare opportunity to talk to Johny Srouji, Apple's head of chip, about the company's foray into the complex field of custom chips. At present, giants such as Amazon, Google, Microsoft and Tesla are also developing their own chips.

"We have thousands of engineers. But if you look at our chip portfolio, we actually have very lean, much more efficient. ”

Unlike traditional chipmakers, Apple does not produce chips for other companies. "Because we don't really sell chips to the outside world, we can focus more on the product itself," Slugee explained. This gives us the freedom to optimize infinitely, and the extensible architecture allows us to reuse components across different products. ”

01 The iPhone has been using self-developed chips since 2010

Sluggie joined Apple in 2008 and was responsible for leading a small team of forty or fifty engineers to design custom chips for the iPhone. Just one month after he joined, Apple spent $278 million to acquire P.A. Semiconductor, a startup with 150 employees.

Ben Bajarin, chief executive and principal analyst at consulting firm Creative Strategies, said: "Apple will start producing its own chips, which is part of their acquisition of P.A. Immediate benefits after Semiconductor. With its inherent design focus, Apple wants to have as much control over the stack as possible. ”

Two years after the acquisition, Apple used its first in-house chip, the A4, on the iPhone 4 and the original iPad. "We built what we called a unified memory architecture, which scales across products," says Sluge. We built an architecture that started with the iPhone and then expanded it to the iPad, smartwatch, and Mac. ”

Apple's chip team has grown to the size of thousands of engineers working in labs around the world, including Israel, Germany, Austria, the United Kingdom, and Japan. In the U.S., Apple has experimental facilities in Silicon Valley, San Diego, and Austin, Texas.

The main type of chip Apple is working on is known as a system-on-chip (SoC). Bagarin explained that it combines a central processing unit (CPU), a graphics processing unit (GPU) and other components. For Apple, there is also a special Neural Processing Unit (NPU) called "Running Neural Engine".

Apple's first SoC product was the A-series, which was upgraded from the A4 in 2010 to the A17 Pro, which was released in September this year. The chip is the central processing unit for iPhones, some iPads, Apple set-top boxes, Apple TVs, and HomePods. Apple's other major SoC product is the M-series, which was first released in 2020 and now supports all new Mac computers and the more advanced iPad, which has been upgraded to the M3 series.

Apple introduced the S-series chip in 2015, which is a smaller chip packaging system for Apple's smartwatches. In addition, Apple uses the H and W series chips in its AirPods. The U-series chips support communication between Apple devices. The latest R1 chip will be available on Apple's hybrid headset Vision Pro early next year. Apple says it will process input from the device's camera, sensors, and microphone within 12 milliseconds to stream images to the display.

"We can design the chips in advance," Slugee said. He added that his staff worked with a team led by hardware director Tenus to "precisely and accurately manufacture chips for these products, and only for those products."

For example, the H2 chip built into the second-generation AirPods Pro can cancel noise better. Inside the new Series 9 Apple Watch, the S9 supports new features such as the double-tap gesture. In the iPhone, the 2017 A11 Bionic is Apple's first Neural Engine, a dedicated part of the SoC dedicated to performing artificial intelligence tasks on the device.

The iPhone 15 Pro and iPhone 15 Pro Max, released in September this year, are powered by the latest A17 Pro, making a major leap forward in features such as computational photography and advanced rendering for games.

Kaiann Drance, who is in charge of iPhone marketing, said: "This is actually the biggest redesign in the history of GPU architecture and Apple silicon. For the first time, we've implemented hardware-accelerated ray tracing. We also have mesh shading acceleration, which allows game developers to create some truly stunning visuals. ”

This led to the release of native iPhone versions of Ubisoft's Assassin's Creed Mirage, The Division Resurgence, and CAPCOM's Resident Evil 4.

Apple said that the A17 Pro will be the first 3nm chip to achieve mass production. "The reason we use the 3nm process is that it allows us to pack more transistors in a given size," Sluge said. This is important for the product and improves energy efficiency. Even though we're not a chip company, there's a reason we're leading the way in this industry. ”

Pictured: Apple's first 3nm chip, the A17 Pro, supports ray tracing and other advanced graphics rendering, which can improve the gameplay of the iPhone 15 Pro and Pro Max

02 Replace Intel processors on Macs

Apple announced in October that it would supply the M3 chip for Mac computers, continuing its move towards 3 nanometers. The company says the M3 has a 22-hour battery life and, similar to the A17 Pro, improves graphics performance.

"It's too early to say success, we still have a lot of work to do, but I think there are a lot of Macs out there now, almost all of them are capable of running AAA games, which is very different from what it was five years ago," said Tenus, head of hardware at Apple for 22 years. ”

In the beginning, Tenus said, "the way we made our products was often to use other companies' technologies and effectively build products around those technologies." Although we pay more attention to aesthetic design, we are greatly constrained by the existing conditions. ”

In 2020, Apple abandoned Intel's PC processors in favor of its own M1 chip in MacBook Air and other Mac computers, a major shift in the semiconductor industry.

"It's almost like the laws of physics have changed," Tenus explains. Suddenly, we could make a thin and light MacBook Air with no fans and an 18-hour battery life that outperformed the MacBook Pro we just launched. ”

He added: "The latest MacBook Pro, powered by Apple's most advanced chip, the M3 Max, was 11 times faster than the MacBook Pro we were producing at the time with Intel's fastest processor. And just two years ago, we were shipping Intel computers in large quantities. ”

Intel processors are based on the x86 architecture, which is the traditional choice of PC manufacturers, and a lot of software has been developed for this. Apple's processors are based on the architecture of Intel's rival Arm, which is known for helping laptops use less power and last longer.

Apple's M1 series of chips launched in 2020 was a turning point in the adoption of Arm-based processors in high-end computers, competing with other big names such as Qualcomm, AMD, and Nvidia, which are also developing Arm-based PC processors. In September, Apple extended its agreement with Arm until 2040.

When Apple unveiled its first custom chip 13 years ago, it stood out as a non-chip company trying to gain a foothold in the highly competitive and costly semiconductor market. Since then, Amazon, Google, Microsoft, and Tesla have all begun experimenting with custom chips.

Stacy Rasgon, managing director and senior analyst at Bernstein Research, said: "Apple can be called a trailblazer in a way. Their actions show that if you do this, you can try to make your product different. ”

Pictured: Godfrey DeSoza, Apple's senior director of hardware validation, demonstrates the M3 SoC at Apple's silicon lab in Cupertino, California

03 "Difficulties in the development of baseband chips"

Of course, Apple hasn't made all the chips it needs for its devices. Baseband chips, for example, are a major hurdle that the company has yet to overcome on its own. "Apple's processors are already very good, but they're having trouble developing their own baseband chips," Rasgate said. Baseband chips are difficult to develop. ”

Apple relies on Qualcomm's baseband chips, although in 2019 the two companies only reached a settlement over a two-year-long intellectual property law. Soon after, Apple bought a majority of Intel's baseband chip business for $1 billion, possibly to develop its own baseband chips. However, Apple has not yet succeeded. In September, Apple signed an agreement with Qualcomm to supply its baseband chips by 2026.

Analyst Bagarin said: "Qualcomm is still producing the best baseband chips in the world. Unless Apple can do the same great thing, it's hard for me to see them fully achieving their self-development goals. ”

Apple's head of chips, Shrugi, said he couldn't comment on "future technologies and products," but said: "We care about phones and we have teams that can make that happen." ”

Apple is also reportedly working on its own Wi-Fi and Bluetooth chips. Currently, the company has a new multibillion-dollar agreement with Broadcom for wireless components. Apple relies on third parties such as Samsung and Micron to provide memory chips.

When asked if Apple would try to design every part of its chips, Slugee said, "Our vision is to build the best products possible. As a technology team, including chips, we want to build the best technology to achieve this vision. To achieve this, Apple prefers to buy off-the-shelf products so that the team can focus on what really matters"

No matter how many chips Apple ultimately designs, it still needs to make chips externally. This requires foundries like TSMC to have large-scale manufacturing plants. More than 90% of the world's advanced chips are made in Taiwan by TSMC, making Apple and other companies in the industry vulnerable to geopolitical factors.

"Obviously, everybody is nervous," Bagarin said. For example, if this happens, what is Plan B? There is no other good alternative. You'd expect Samsung to be more competitive, and Intel is also getting into that space. However, we don't have this capability yet, and everything depends on TSMC. ”

Apple wants to move at least some of its chip manufacturing operations to the United States, promising to be TSMC's biggest customer for its upcoming factory in Arizona. Not long ago, Apple also announced that it would be Amkor's first (and largest) customer for a new $2 billion manufacturing and packaging plant in Peoria, Arizona. Amkor will be responsible for packaging Apple chips produced at TSMC's Arizona facility.

"We always want to diversify our supply chain across Asia, Europe and the U.S., which is why I think it's a good thing for TSMC to have a factory in Arizona," Sluge said. ”

04 Recruitment, local chip manufacturing shortage of skilled workers

Another concern for Apple is the lack of skilled chip workers in the United States, which has not built advanced fabs in decades. TSMC said its Arizona plant is now being delayed until 2025 due to a lack of skilled workers.

Whether or not this is related to the talent shortage, Apple has slowed down in releasing new chips. "Chip iterations are taking longer and longer because they are getting harder and harder to develop," Slugee said. In addition, compared to 10 years ago, there are more things that can be packaged in chips, and energy efficiency is also improving. ”

Shruggie reiterated his point that Apple has an advantage in this area because "I don't need to worry about where my chips are going to be sent to, how can I target a larger customer base?"

Still, Apple's actions highlight its competitiveness in the market. In 2019, Gerard Williams, Apple's chip architect, left to create a data center chip startup called Nuvia and took some Apple engineers with him. Apple sued Williams over intellectual property issues, and dropped the lawsuit this year. Qualcomm acquired Nuvia in 2021 in a move aimed at competing with Arm-based PC processors such as Apple.

"I can't discuss the legal aspects, but we do care about intellectual property protection," Slugi said. When some people leave for some reason, it's their choice. ”

Apple's core business faces more macro challenges as smartphone sales have just recovered from their lowest levels in years. However, the demand for AI workloads is leading to a surge in orders for chips, especially GPUs made by companies like Nvidia. The company's stock price has risen by more than 200% this year due to the popularity of ChatGPT and other generative AI services.

Since 2016, Google has designed tensor processing units (TPUs) for artificial intelligence. Since 2018, AWS, Amazon's cloud computing arm, has provided its own AI chips for data centers. Microsoft released its new AI chip in November last year.

Shruge said his team at Apple had been working on machine learning engines long before the A11 Bionic chip launched the Apple Neural Engine in 2017. Apple's Neural Engine supports what it calls "on-device machine learning capabilities," such as facial recognition.

In July, it was rumored that Apple had developed its own large language model, Ajax, and a chatbot, Apple GPT. An Apple spokesman declined to comment. Since 2015, Apple has also acquired more than 20 AI companies.

Asked if Apple is lagging behind in the field of artificial intelligence, Sluggie said: "I don't think we're lagging behind. But Bagarin is skeptical. Talking about Apple's position in the field of artificial intelligence, he said: "Last year, Apple made good achievements in the field of chips, and this year's M3 chip is more powerful. But Apple's software must catch up so that developers can take advantage of its hardware and write future AI software on Apple silicon. ”

Bagarin expects the situation to improve soon. "Apple had the opportunity to really do that from day one," he said. But it seems to me that everyone is confident that it will shine in AI next year. (Compiled by Golden Deer)