Rumor mill: Apple is facing an unexpected test of its supply chain strategy after surging sales of the MacBook Neo created shortages of key components originally intended to be recycled stock. Sources familiar with the matter tell Taipei tech journalist Tim Culpan that the company is in discussions with suppliers about whether to expand production or let inventories run down, a decision that could shape margins and influence Apple's broader hardware roadmap.
The lightweight laptop – available in four colors and two configurations – was built around Apple's A18 Pro processor, the chip that powered last year's iPhone 16 Pro. In the Neo, that silicon wasn't newly fabricated; instead, Apple repurposed remaining batches from the initial iPhone run, according to Ben Thompson of Stratechery.
He explained that the Neo uses an A18 Pro variant with one GPU core disabled: "You could make the case that some number of these chips are effectively free for Apple." This practice of "binning" chips with minor defects – salvaging usable dies rather than scrapping them – helped turn surplus iPhone silicon into the backbone of a low-cost Mac.
The approach was effective – perhaps too effective. Apple initially planned roughly five to six million Neo units assembled by Quanta and Foxconn at plants in Vietnam and China. Those volumes are now being reevaluated as the supply of usable A18 Pros dwindles.
A pivot to produce more systems would require significant cost adjustments, since TSMC's 3-nanometer process used to make the chip is already effectively at capacity. Buying new wafer lots or reallocating existing ones would raise expenses well above the near-zero cost of the original inventory.
Culpan points out that Apple could ask TSMC CEO CC Wei to prioritize a new batch of chips at a premium price, but doing so would likely erase the profit margins on its budget laptop.
A similar squeeze applies to other inputs, such as aluminum and memory, whose rising prices compound the problem.
To offset higher component costs, one possibility would be for Apple to narrow model options or slightly raise prices. Culpan suggests that the company could discontinue the $599 256GB version, keep only the $699 512GB model, or package added value like one-year trials of expanded iCloud storage. Such moves would protect margins while maintaining the Neo's appeal as an affordable entry point into macOS.
Image credit: Tim Culpan
Beyond the immediate production dilemma lies a strategic question. The Neo's popularity highlights the demand for less expensive Mac hardware. Although the Neo risks cannibalizing sales of the MacBook Air and Pro, Culpan argues the long-term effect may be to convert Windows users and expand Apple's footprint among mainstream and corporate customers.
It wouldn't be the first time a lower-cost product reshaped Apple's ecosystem. Two decades ago, the iPod became a seasonal staple and gateway into Apple's world of devices. The Neo's pricing and design could replicate that success – if Apple decides the economics of a second production run make sense.