Main points
- Apple uses a strategy of “chip binning”, adapting partially faulty processors for less demanding devices, which brings hundreds of millions of dollars in savings.
- This practice allows Apple to reduce production losses, lower the cost of devices, and create more affordable models by using imperfect chips as efficiently as possible.
Why Apple's defective chips became a profitable part of its strategy / Unsplash / Bangyu Wang
Apple has long turned what would be a production loss for most manufacturers into a source of profit. New information shows that the practice is generating hundreds of millions of dollars for the company.
Apple has been using a technological approach known as “chip binning” for years – a process of sorting processors after production, which allows the company to adapt them for other devices instead of recycling chips with partially faulty components. This is reported by 9to5mac .
How did Apple learn to make money on “defective” processors?
A new report from The Wall Street Journal suggests that this practice for Apple is not just a way to minimize losses, but a full-fledged business strategy that has been in place for over a decade and a half – since the original iPad and iPhone 4 .
The essence of the method is that after production, not all chips fully meet the initial specifications. For example, if one of the graphics cores is unstable or individual blocks consume more power, such a processor is not necessarily defective.
Instead, Apple disables problematic components at the software or hardware level and uses such a chip in a less demanding device.
Why is this beneficial to Apple?
Manufacturing modern processors is an extremely expensive and complex process. During the manufacture of silicon wafers , even the smallest microscopic defects can affect the performance of individual areas of the crystal. For most companies, this means losses.
Apple uses such imperfect chips as efficiently as possible.
The advantages of this approach are obvious:
- the percentage of suitable products increases;
- production losses are reduced;
- the cost of devices decreases;
- the company can create more affordable models;
- the need for additional production is reduced.
According to sources at The Wall Street Journal, such a strategy could have saved Apple hundreds of millions of dollars.
From MacBook Air to MacBook Neo
One of the most famous examples was the story of the first MacBook Air with the M1 processor , which Apple introduced in 2020.
The base version of the laptop received a 7-core graphics processor, while more expensive models had a full 8-core GPU.
This wasn't a custom-designed chip. In fact, Apple used the same M1, but with one graphics core deactivated due to manufacturing variances.
A similar approach became the basis for the MacBook Neo . According to sources, for this laptop, Apple used “killed” A18 Pro processors, which were originally intended for the iPhone 16 Pro, but had only five functional graphics cores out of six .
This strategy proved so successful that demand for the MacBook Neo exceeded the company's expectations, and Apple even had to order additional production of such processors after the reserves of already sorted chips ran out.
What other devices use “trimmed” chips?
The Wall Street Journal names several other products where Apple has taken a similar approach.
Among them:
- iPhone SE with A15 Bionic processor;
- iPad mini with A17 Pro;
- iPhone 16e with A18;
- iPhone 17e with A19;
- iPhone Air with A19 Pro.
However, the list is much broader.
According to sources, back in the era of the A4 chip, Apple used processors that consumed too much power for smartphones in Apple TV set-top boxes, where battery power was not critical.
It was a similar story with the S7 chips . Less energy-efficient versions that were not suitable for the Apple Watch found application in the second generation HomePod.
This is not a defect, but part of the engineering philosophy
At first glance, it may seem like Apple is selling “defective” components . In fact, this is a long-established practice in the semiconductor industry.
After testing, the manufacturer knows exactly which blocks work stably and which do not meet the maximum performance. If the chip meets the requirements of a particular device after partial disconnection of individual modules, it is considered fully suitable. For the user, this means only slightly lower performance compared to older models.
For Apple , it is an opportunity to flexibly shape the product line, create new budget devices, and use each produced crystal as efficiently as possible.
The story of “defective” chips demonstrates that engineering efficiency sometimes brings no less benefit than the creation of fundamentally new technologies.