Kuo: Apple to cut 3nm chipset orders for 2024

Apple recently introduced the Apple A17 Pro with the new iPhone 15 Pro and Pro Max. The new chipset marks a huge milestone for iPhones in performance. The chipset’s power enables it to handle heavyweight games such as Resident Evil Village and Assassins’ Creed Mirage. It’s also the first 3nm chipset to hit the mobile smartphone market. Despite the high expectations for a new era of 3nm chips in Apple devices, the brand’s production forecast is being reduced. Let’s find out the reason in this article (Source).

Apple to reduce orders for 3nm chips

According to Apple’s expert and analyst Ming-Chi Kuo, Apple is lowering demand for 3nm chips; Qualcomm is also scaling back production, pushing Dutch ASML to cut EUV equipment shipment for 2024 by about 20 to 30%. The current market consensus was the semiconductor business would bottom out in the second half of this year. The slump might stretchy further to Q2 2024. ASML currently stands as the major equipment supplier to chipset foundries worldwide. The forecast for lower shipments has three major reasons.

The first was Apple facing a decreasing demand for MacBook and iPad devices after the decline of Work-From-Home. The new Apple chips and mini LED screens are not sufficient for customers to switch to new devices, and Cupertino posted a 30% decline in laptops shipped, as well as a 22% decrease in shipped iPads.

“Apple’s 3nm demand for 2024 would be below expectations. In 2023, Apple’s MacBook and iPad shipments declined significantly by approximately 30% and 22% to 17 million and 48 million units, respectively. The sharp decline is attributed to the end of work-from-home (WFH) demand and diminishing user appeal for the new specifications (Apple Silicon and Mini-LED). Looking ahead to 2024, Apple’s 3nm demand is negatively impacted by the lack of growth drivers for MacBook and iPad.”

What explains the decline and Apple’s decision of reducing its orders?

With the COVID-19 pandemic in 2020, the world had to adapt to several safety measures. Many big corporations had to send their employees to work remotely from home. The same happened with students. Needing proper equipment for remote work and study, many consumers started to opt for tablets like iPad. At the same time they would meet their work or study needs, these devices could deliver entertainment and relaxation. During the fiscal first quarter of 2021, Apple saw a 41% year-over-year increase in iPad sales to $8.44 billion.

However, with the pandemic over, tablet sales have dropped off and the iPad has been no exception. For 2023, the iPad shipments will decline 22% to 48 million units according to Ming-Chi Kuo. The drop off in work for home demand also applies to MacBooks. To prevent financial losses, Apple will play safe by not stocking millions of its 3nm chips.

Our Verdict

In the end, it seems that Apple is playing a “safe game” with its 3nm chips. Apple does plan to launch new MacBooks and iPads with 3nm chips in 2024. However, the company is no longer expecting a huge catalyst to power the demand of such products. The pandemic is gone, and most companies are calling workers back to the office or opting for hybrid work. With the expectations lower, Apple is moving down its production numbers aiming on a more realistic forecast.