Apple's Johny Srouji talks to the Wall Street Journal

"He likes his cars like his chips, he said: 'Fast and furious.'"

From Tim Higgins' "The Chips That Rebooted the Mac" in the Weekend WSJ:

Apple Inc. had a problem. While its iPhones were flying off shelves, sales of Mac computers were stagnating. Customers weren’t thrilled with their design or performance.

Five years later, Mac sales are soaring. The turnaround is due to an unusual, years long effort to build one of the world’s most advanced chip-design operations inside the world’s best-known gadget maker.

Led by a onetime Intel engineer and IBM executive named Johny Srouji, Apple’s semiconductor division launched a risky project to replace the Intel processors that powered Apple laptops and desktops for 15 years with chips designed in-house. Those M1 chips, which are far more energy-efficient than Intel’s, enabled Macs to run much faster and generate less heat, laying the groundwork for a resurgence in Apple’s computer line. The company has now gained control over an essential component just as supply-chain disruptions cause disorder in the rest of the chip market...

One of biggest worries came with the arrival of Covid-19, which threatened to derail years of prep ahead of the M1 chips’ fall 2020 debut. U.S. companies implemented remote-work mandates just as Apple was to begin arduous testing to validate the chips before going into production—a labor-intensive process that involves engineers huddled over microscopes to inspect the early silicon for quality.

Delaying the progress of new chips wasn’t an option. So Mr. Srouji worked to design a new testing process on the fly. The team set up cameras throughout the labs so engineers could inspect the chips remotely, people familiar with the work said. It was the kind of change that would have once been hard to imagine from Apple, where secrecy and control are paramount.

In part, the operation was able to pivot so seamlessly because Mr. Srouji’s team is spread out around the globe, already accustomed to conducting business through video calls and working across time zones as they coordinated work in far-flung locations such as San Diego and Munich, Germany, two places where the company is investing billions to expand into designing chips for its wireless-technology capabilities...

In classic Apple style, Mr. Srouji remained mum on what the future might hold, including whether Apple has developed its own powerful processor for an autonomous car, similar to what Tesla has developed.

“I’m not going to talk about any of that,” he said laughing.

My take: A worthy piece. Little bits of Srouji supported by interviews with chip analysts, software developers and a soundbite from Intel CEO Pat Gelsinger, commenting on Apple's silicon: “They did a pretty good job,”

8 Comments

  1. Bart Yee said:
    “The turnaround is due to an unusual, years long effort to build one of the world’s most advanced chip-design operations inside the world’s best-known gadget maker.

    Unusual? Maybe for other companies who thought catching up to Intel, AMD, Nvidia, even MicroTek would be a daunting, costly, and ultimately profitless adventure IF you had to make processors for sale, you couldn’t even make it up on volume.

    But Apple, through Jobs, Cook, Srouji, et.al., and the foundation of the fabless low power CPU design IP of PA Semi acquisition for just $278M in 2008 (literally as the iPhone came to market), pointed exactly where Apple was heading – Apple had to rely on Intel for Mac processors. Moreover, Apple had to rely on a kludge of parts for the iPhone because no one had chips that could fully realize Jobs’ vision for the iPhone. Plus no one was truly interested (even today) in lowest power, highest performance – you could just add more fans, more heatsink a, bigger power supplies or more battery. (See Android flagships that pack a 5000 mAh battery yet still overheat, throttle, and run out of battery power).

    Apple’s commitment that long ago to lower power, high performance chips for its own (differentiating) use came to fruition roughly with the A5 in 2011. Ever since, Apple has reaped the rewards of controlling it’s own CPU destiny, performance, and supply.

    4
    April 16, 2022
    • David Drinkwater said:
      Bart, you seem to challenge the idea of uniqueness (perhaps I misread that “unusual”).

      It is, in fact, really unusual for a company to insource chip design. That is a special, easily under-appreciated skill set. Proceeding to manufacture those chips is also very difficult (and in my professional experience, under-appreciated), so fair credit to Apple for remaining (at least externally thus far) apparently fabless.

      It is also *not* unusual that it takes years. I’m in the process of insourcing manufacture of a design that was made at the request of my company by another company (for design) and manufactured by no less than two fabs before we decided to insource manufacturing to our fab that I work in. I think the first email regarding this project goes back to December of 2014. Might be 2015, but I think it’s 2014.

      0
      April 17, 2022
  2. Fred Stein said:
    Best article by Higgins. Coming from WSJ, we may finally see Mr. Market appreciate the value of Apple’s lead in chips. This will power years of growth. Apple will expand in the High Performance Computing sector.

    Like services, it takes years for the market to ‘get’ what Apple states plainly.

    2
    April 16, 2022
  3. Timothy Smith said:
    This is old news to us, but logically, it should make Apple stock go up on Monday, right?

    3
    April 16, 2022
    • Bart Yee said:
      Mister Market (made up of a wide array of investors / bettors / analysts) logical??? 😂😂😂

      Nah, IMO, this story has been / is way too long term for Apple compared to the short term thinking / behavior of most of Wall St. And in much of Apple’s story, it’s being overshadowed by macroeconomic and geopolitical events which sap much of any investors’ enthusiasm or momentum.

      However, discerning investors (readers of PED 3.0) with a long term investing horizon would do well to snap up AAPL shares on the dips and build a nice dollar cost averaging position. IMO, a 1, 2 and 5 year time frame would prove an AAPL investment to be quite profitable.

      2
      April 16, 2022
      • David Emery said:
        “However, discerning investors (readers of PED 3.0) with a long term investing horizon would do well to snap up AAPL shares on the dip”

        Huh… Pretty much every dollar I have for investing is already in AAPL…

        0
        April 17, 2022
  4. Steven Philips said:
    Yeah, but my “long term horizon” is getting shorter each year! 🙂

    2
    April 16, 2022

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