Apple's Anticipated 3nm Chip Demand May Fall Short of Projections

Apple's recent decline in demand for its hardware, particularly MacBooks and iPads, is having a ripple effect throughout the tech industry. This shift is expected to have an impact on chip manufacturers, including ASML, which is considering reducing production of expensive EUV (extreme ultraviolet) equipment due to lower demand from Apple and other companies. Renowned analyst Ming-Chi Kuo has shed light on this trend, predicting a significant 30% drop in equipment orders in the coming year.

The Decline in Apple Hardware Shipments

In a Medium post, Kuo points out that Apple's MacBook and iPad shipments experienced a substantial decline in 2023. MacBook shipments saw a staggering 30% decrease, while iPad shipments fell by 22%, with totals reaching 17 million and 48 million units, respectively. Kuo attributes this sharp decline to the end of the work-from-home (WFH) trend and a waning interest among users for the new specifications, including Apple Silicon and Mini-LED displays.

Impact on Chip Manufacturers

The repercussions extend beyond Apple itself. ASML, a leading Dutch firm specializing in photolithography machines, is expected to slash its EUV equipment shipment forecasts by as much as 30% in the coming year. Kuo links this significant reduction to Apple's demand for its upcoming 3nm M3 chip, which is anticipated to be below initial estimates.

Challenges for Future MacBook and iPad Models

The upcoming M3 chip, produced on the same N3B process as the A17 Pro, might not deliver the revolutionary performance and power-efficiency gains that consumers had anticipated. This may lead potential buyers of future MacBook and iPad models to doubt whether upgrading is worth it, as they fear the M3 could mirror the less-than-impressive efficiency numbers of the A17 Pro.

Moreover, Qualcomm is facing a similar conundrum, with demand for its 3nm chips falling below expectations. Huawei's shift to its own Kirin SoCs has resulted in a loss of 60 million chip orders for Qualcomm, while Samsung's Exynos 2400 is poised to challenge Qualcomm's market share when it debuts with the Galaxy S24 series.

Both Apple and Qualcomm are grappling with these successive setbacks, and the financial implications for 2024 remain uncertain.

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