Discussing Apple’s self-developed chips, talent drain, generative AI, 3nm production capacity, relationship with TSMC, US chip manufacturing…
On December 25th, according to Related Media’s report, Apple’s chip head Johny Srouji, and Senior Vice President of Hardware Engineering John Ternus participated in an insightful and high-information-density interview with CNBC reporter Katie Tarasov.
They extensively discussed Apple’s plan for self-developed chips, addressed how the Apple chip team collaborates, whether Apple intends to control all chip aspects, the complete shift to self-developed computer chips, why the M3 release compared performance with the M1 chip, and whether talent drain at Apple has led to a slowdown in its development.
During the conversation, Srouji repeatedly emphasized that Apple isn’t merely a chip company and isn’t attempting to compete with chip suppliers. They desire to create the world’s best products, including ensuring the manufacturing of top-notch chips. Hence, Apple hopes to develop the best technology to achieve this vision. If readily available technology aligns with their product goals, Apple will purchase it, enabling them to focus on genuinely significant matters and maximize their interests.
The two Apple executives also uncommonly discussed Apple’s seeming lag in the AI field, Moore’s Law, chip shortages, geopolitical risks in the China-Taiwan region, 3nm production capacity, and the US Arizona chip manufacturing project, among other hot topics.
Regarding some ‘overly sensitive’ questions, such as reliance on Nvidia’s chips, progress with self-developed baseband chips, and dealings with Qualcomm’s baseband chips, Srouji evaded by directly interrupting or diverting the topic.
For instance, when asked, “Is Apple envisioning the future of generative AI running on devices?” Srouji avoided, saying, “We cannot discuss the future.”
When asked, “Do you rely on Nvidia’s products? Do you buy from Nvidia?” he swiftly interrupted, stating, “We cannot discuss that.” When questioned about what happened with Apple’s baseband chips or why they extended the deal with Qualcomm’s baseband chips, he vaguely mentioned the importance of connectivity for Apple devices, highlighting an internally strong team dedicated to enhancing their technology for their products.
“But I truly cannot provide too much insight and commentary on future technology and products. The reason is clear. We care about the phone; we have a team to accomplish that, we cooperate with Qualcomm, in the past, we collaborated with other companies to make our competition possible,” expressed Srouji.
Here are some substantial nuggets of information from this remarkable conversation.
01
The Essence of Self-Development: Key Technological Self-Innovation Marks the Most Profound Transformation of the Last 20 Years
Two Apple executives briefly introduced themselves.
Johny Srouji joined Apple in March 2008 as the Vice President of Hardware Technologies, overseeing chip development for the iPhone. Initially, the team comprised around forty to fifty engineers, which then rapidly expanded and underwent several strategically significant acquisitions, helping Apple achieve its goal of autonomous chip development.
“Over the past 15 years, we have been building a world-class team, 100% focused on making the best chips for our products. It’s been a journey I love,” said Srouji.
John Ternus, Senior Vice President of Hardware Engineering at Apple since 2001, has been involved in nearly all types of products produced by Apple and shares a very close working relationship with Srouji.
As early as 2008, Apple decided to create things that couldn’t be bought from the market. Apple’s vision led it to make efforts to possess and control chips. The decision to develop chips on top of integrated hardware, software, and operating systems propelled Apple forward.
Apple’s hardware, chips, technology, and software work closely together as a team, optimizing integrated products for specific purposes. They plan chips three to four years in advance, allowing the chip team the freedom to innovate and optimize software extensively. Srouji mentioned that with this advantage, Apple isn’t concerned about voices suggesting it lags in AI.
He emphasized that Apple is a product company, providing the team with the freedom to innovate and make long-term investments as per demand. Apple values the quality of engineers, considering the cost of running and manufacturing chips against the products it owns as a worthwhile deal.
The Apple chip team has built a unified memory architecture that can scale across products (iPhone, iPad, Apple Watch, Mac). According to Srouji, this similarity in architecture among different products is crucial for the efficiency of the chip, product, hardware, and software teams.
Ternus mentioned that initially when Apple produced products, it leaned towards using other companies’ technology but faced certain restrictions. “I think one of the most profound changes for Apple over the past 20 years, of course, is how we now internally develop these technologies, most notably the chips,” he added, “We consider how to bring all these parts together to offer our customers the best products.”
02
Addressing Talent Drain: Continuing to Hire Top Talent in Response to Dropping Lawsuit Against NUVIA Founders
Now, Apple has thousands of engineers researching chips.
When asked about the issue of talent loss leading to a slowdown in development, Srouji replied that Apple has thousands of engineers in the United States, Europe, and Israel. There is a world-class team to manufacture these chips. Apple has profound talent, skills, and leadership abilities to lead these teams and will continue to hire the most outstanding talent, whether they are university students or experienced individuals.
He said that often people might choose to switch companies for various reasons. But he doesn’t think Apple has any issues because Apple is still recruiting the best talent to bring them back. He feels immensely proud of the Apple team. “If you see any progress we’ve made in this field, it’s a reflection of the organization we’ve built, and it’s stronger.” He remarked.
In recent years, Qualcomm’s self-developed CPU core design capabilities have greatly enhanced, largely due to the acquisition of the chip startup NUVIA in 2021. NUVIA’s founder, Gerard Williams III, was the designer of Apple’s A-series mobile chips and had worked at Apple for nine years. He was sued by Apple for contract violation six months after leaving Apple to join NUVIA.
As for what caused Apple to drop the lawsuit against Gerard Williams going to NUVIA, Srouji replied, “We have excellent engineers developing amazing technology and chips, which are difficult to manufacture. So, we genuinely care about protecting intellectual property. Besides that, I cannot discuss legal matters, but we do care about intellectual property protection. When some people leave for certain reasons, it’s their choice, and that’s okay.
03
Chip Strategy Discussion: Apple’s Focus on Product Experience Rather Than Full Self-Development
Does Apple want to control every part of the chip? Srouji denied it, explaining that Apple wants to control aspects that can support the product but won’t control something for internal layout; that’s not Apple’s DNA.
Apple has a team building storage controllers for NAND memory, embedding them into system-level chips. The reason behind this is that Apple cares not only about capturing the best photos but also about the durability of storage devices, aiming to provide the best, most reliable, and fastest storage. Simultaneously, with up to 128GB of DRAM memory capacity and 400GB/s bandwidth, the devices can run machine learning locally.
Srouji mentioned that running AI, machine learning, or generative AI on devices requires three things: computation, DRAM capacity, and DRAM bandwidth. Regarding computation, it dates back to the 2017 release of the bionic chip. Apple developed its machine learning engine, which is the most energy-efficient computing element for certain workloads.
When asked if Apple users care about their devices using chips from Apple, Srouji believes they do because Apple isn’t a chip company; it has a world-class chip team. Chip designers have the freedom to design the thermal envelope, shape, software, and how product use doesn’t affect the design, providing power-efficient chips of the same class, rich in features, ensuring customer experience through predictable execution and early commitment.
“Only Apple can do this because we are united,” he emphasized repeatedly. “We’re not a chip company; we’re a product company. Hence, our guiding principle is to provide technology that delivers the best products. That’s how we operate.”
In his view, the iPhone can be seen as a constraint, which is their “best friend.” “I’ve always believed that constraints make for great engineering. By doing so, we had to create an extremely power-efficient architecture, which leveraged our advantages as we expanded to iPad and Mac,” said Srouji.
He also mentioned Apple’s focus on every IP. Apple understood from the start that it couldn’t build every IP alone, so it focused heavily on its differentiation, starting with only one licensable project at a time.
04
Unveiling Apple’s In-House Mac Chips: An Intriguing Turn of Events and Boundary-Pushing Challenge
Ternus said: ‘Our goal is to focus the best products on the most critical things, which will enable us to do some uniquely great things.’
‘I think Mac provided us with a very interesting turning point because for years we’ve been developing products using other people’s chips, and then suddenly we have our own,’ he shared. ‘In my view, when we started using Apple’s chips in the Mac, for those of us who have been involved in computer manufacturing for a long time, it was almost like a change in the laws of physics.’
He believes that even customers who may not necessarily know that Apple is using in-house chips will fundamentally see a completely different computer experience.
‘We decided to transition the Mac to our chips because we want to make better products that enable us to manufacture what we want without compromise,’ said Srouji. He has always believed that imagination or the vision of what we want to build should not limit us. Apple is pushing boundaries, which will translate into better machines that customers will love.
Another issue of interest is that Apple compared the performance of M3 and M1 at the event, not M2. Srouji responded, ‘We wanted to make comparisons from when we started the transition. In our video, there are comparisons of M1 and M2 on other systems, but we wanted to focus on M1. So we’re just focusing on one chip, but compared to M1 and M2, the progress is enormous. So, it’s an issue of focus in the information; they’re all there.’
05
Chip Manufacturing Talk: 3nm Capacity, TSMC Collaboration, Geopolitical Contingency Plans
How to view the maintenance of Moore’s Law is a long-standing topic in the chip industry. Srouji believes that measuring the progress of chips can be summed up in three indicators: transistor density, performance, and efficiency. Compared to 10 years ago, improving these capabilities has become increasingly difficult.
In his view, this is one of Apple’s advantages because Apple is not a chip company, so it doesn’t need to worry about where to sell chips. Therefore, it must use precious transistors wisely, considering how products will benefit and how software will use them. ‘I believe this is how we make progress, faster than anyone else,’ Srouji said.
Regarding chip shortages, he mentioned that Apple collaborates closely in advance with manufacturing partners to solve similar issues. However, he declined to answer about 3nm production volumes, only mentioning that Apple’s latest Mac chip series (M3, M3 Max, etc.) is collaborating with partners, believing they have the technology and capability to handle Apple’s business.
Regarding the previous rumors about iPhone 15 overheating possibly caused by the 3nm chip, Srouji briefly responded, ‘As far as I know, there isn’t.’ Ternus added that the overheating issue wasn’t related to the chip, and this matter has been resolved. Apple used a software update to fix the bug.
So, what risks would a company face in becoming the first to market with 3nm chips? Srouji believes that risks exist, which is why the best teams from both sides need to collaborate, whether it’s the wafer fabrication team or the design team. Chip design has no room for regrets; once flaws are discovered late, it costs a lot to fix them. Therefore, Apple’s team is very cautious in chip design, ensuring that everything undergoes rigorous checks.
‘If you don’t have the best team, you can’t achieve these goals, but there are risks,’ Srouji said, noting that the results have been good enough to calculate risk with rich returns.
Srouji is very excited about the chip manufacturing project in Arizona, believing that Apple has always supported advanced manufacturing in the United States and supported having more silicon expertise in the United States.
‘We have thousands of engineers in the US, and thousands more in Europe, Israel, and elsewhere, but we only hire the best talent in the US,’ Srouji said. ‘We also collaborate with universities on courses, preparing their students, the next generation of engineers. We also encourage our partners to expand their manufacturing capabilities in the US, so I think this is exciting. It’s a great move.’
When asked about the urgency of advanced chip manufacturing concentrated in China’s Taiwan region, Srouji said that Apple hopes for diversified supply, always aiming to provide and manufacture the world’s best chips for the best products. This means using the best tools, and the best technology, needing a fab with that technology, and wanting a partner with aligned goals, execution, and reliable delivery according to Apple’s needs.
Srouji speaks highly of TSMC, saying that a significant portion of Apple’s internal chips is provided by TSMC, and Apple has been cooperating with TSMC for over a decade; they have always been reliable.
However, he also added that Apple is always exploring various options to acquire the best technology. If some foundries meet Apple’s requirements, Apple is open to trying them.
The journalist further inquired whether Apple, known for its preparedness, has contingency plans to distance itself from problems and whether the geopolitical situation in China’s Taiwan region could escalate.
To this, Srouji responded, ‘I can’t answer about plans, but what I can say is that I fully support what you’re saying. We always look ahead. We have strategic bets, and we’re very careful with our plans.’
06
Conclusion: Striving Towards Crafting the Finest Products
Overall, Apple’s goal in chip development is remarkably clear – everything is geared towards creating the best products, without a direct inclination towards engaging in the chip market competition. In their specific approach, Apple starts from product requirements to choose between in-house development or purchasing existing chip technology and products from the market. They then deliver a solution to the final device through a combination of hardware and software to achieve the most efficient outcome possible.
For the average consumer, whether the chips inside Apple devices are developed in-house or procured from third parties isn’t that crucial. Whether it’s 3nm or 5nm, whether it’s Apple’s own or Qualcomm’s baseband chip, what truly matters to them is whether the internet speed is faster, battery life is longer, applications enhance productivity, camera quality is better, gaming experiences are smoother… These device-end experiences are where Apple’s competitive edge and survival depend.
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