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Apple Mac Line, Once Dubbed ‘Dinosaur,’ Gets New Life in Pandemic, In-House Chips

Apple continues to shift its production in-house.
(Katerina_Minaeva)
(Katerina_Minaeva)
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On Tuesday, Apple unveiled new Mac laptops featuring its new M1 microchip, WSJ reports.

What is the M1? It’s a microchip the tech giant designed in-house to give devices “faster performance, better battery life and, maybe, bigger profits.”

How did we get here? Apple co-founder Steve Jobs began a 15-year relationship with Intel back in 2005 to improve Apple computers’ performance, which was then its primary business. The release of the M1 marks the breakup of the two corporate giants and is the “latest example of tech companies developing their own computing power.”

So, how does this benefit Apple? Bringing in more in-house components opens up opportunities to cut costs and bring special features to products. Production of the iPhone has already followed a similar path.

The Big Picture: Improvements to the Mac line only enhances the seamless network effect of Apple’s products, and the company is looking to diversify its revenue streams to “augment falling iPhone sales.”

Justin Oh:

These new Mac announcements don’t fundamentally change my view on Apple ($AAPL). It seems like they are refreshing an old product line to stay relevant instead of opening up new growth opportunities.

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Responses

  1. I read some articles by a computer magazine about the new M1 Apple computers and I am quite impressed by that the M1 machines are up to 2x as quick WHILE running up to 2x as long on battery. And there are more advanced chips to come in 2021 and 2022. Given my impression that Apple has roughly 10% of PC market share I could sincerely imagine that to double.
    The other important part here is that Apple can save significantly on production costs as they are not buying these chips from externals (Intel) anymore, but have them manufactured at their taiwanese production partners at a much lower price. What adds to pushing the margin is the fact that Apple makes those laptops and desktops (that is Mac mini, at the moment) not upgradable, that means you can not exchange any compoments like RAM or the hard drive, so this will push customers to order the machines with the extras (bigger hard drive etc.) they want and can not add later. And Apple charges between double to tripple the cost of an equivilant part bought separately somewhere else to put it into the computer, which is not possible anymore.
    Still being a layman on what that means in terms of financial numbers for Apple my guess is, that this is too little an economic effect to push Apple’s valuation (expected cash flow and growth) to the share price the market ask for, but this and the autumn market rally up close to all time highs explains to me the share price we are at right now.

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