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Apple may be saving billions in component costs by switching to M1 Mac

Credit: Andrew O'Hara, AppleInsider

Apple may be saving around $2.5 billion in component costs by swapping Intel processors to M1 chips in some of its Mac and MacBook models.

That's an estimation by Sumit Gupta, IBM's vice president of AI Strategy. Gupta did some math based on rough estimates of Apple shipment volumes to arrive at that conclusion of Apple Silicon savings.

The IBM executive began with the assumption that Apple has shipped 8.6 million 13-inch MacBook Pro units and 5.4 million MacBook Air units throughout 2020.

From here, Gupta assumed processor costs of $40 to $50 per each M1 chipset. That's compared to an Intel Core i5 dual-core CPU for the MacBook Air, priced at about $175 to $200, and an Intel Core i5 quad-core CPU for the entry-level MacBook Pro, priced at $225 to $250.

Based on those component costs, the IBM VP suggests that Apple may have spent $3.2 billion on CPUs for Intel MacBook Air and MacBook Pro models. The same volume of M1-equipped devices would bring that total down to $697 million, a savings of $2.5 billion.

Of course, the glaring issue with this math is that it assumes all Mac models are MacBooks. They're not. Gupta didn't account for devices like the iMac, Mac Pro, or Mac mini in his overall Mac sales assessment.

And although cost was likely a factor in Apple's decision to move away from Intel, it's probably not one of the more important ones. More likely is that Apple wanted to free itself from the constraints of Intel product delays and a slowing roadmap of advancement.

Additionally, as Apple executives have explained and benchmarks have proven, the company's silicon technology brings a number of significant improvements to the user experience, such as battery life and performance.

Morgan Stanley does estimate that the MacBook Air, 13-inch MacBook Pro, and Mac mini made up about 91% of all Mac shipments in the past twelve months. Even if Gupta's math doesn't take the Mac mini and other desktops into account, Apple is still likely saving quite a bit of money with the M1 chip versus Intel processors.