Apple’s incomplete divorce with Intel

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Apple’s (NASDAQ:AAPL) decision to ditch Intel (INTC) processors in favor of its own custom chips was a risky gamble that paid off handsomely. Apple’s decision revitalized the Mac lineup with high-performance ARM architecture processors that are several times more energy efficient than Intel’s. Mack’s revenue growth has been revived, with Mach’s revenue growing 23% in fiscal 2021. However, the Mac Pro is still Intel-based, and Apple Silicon Macs still rely heavily on Intel’s Thunderbolt.

Apple’s venerable Intel-based Mac Pro. Source: apple.

Intel’s move to Apple silicon has been a resounding success

When Apple introduced the first Apple Silicon Mac in November 2020, Intel had become a millstone around Apple’s neck. Mack revenue stagnated. It was very difficult for Apple to make different PCs with the same processor that they all used.

Apple Silicon Macs received another boost when the new MacBook Pros were introduced in October 2021. Fiscal 2022 Q1, Mac revenue grew 25% year over year, a higher growth rate than any other product category this quarter. And Mach grew 14.6% year over year in the second quarter of fiscal 2022, second only to Services.

Analysts may not have fully understood the impact of Apple Silicon. IDC claimed that Mac unit shipments grew just 8.6% year over year in calendar 2021 Q4 (Apple’s fiscal 2022 Q1), but that would be sizeable ASP growth given the company’s 25% revenue growth. Gartner also claimed that sales of Mach units were up just 6.2% year over year.

Apple is cautious about pricing Apple Silicon Macs compared to their Intel-based predecessors, so I think analysts are underestimating Apple Silicon’s impact. It looks like this will continue into Apple’s fiscal second quarter. For calendar quarter 2022 Q1, IDC forecasts Mac shipments growth of just 4.3% year over year and Gartner forecasts unit sales growth of 8.6%.

It seems analysts still haven’t accepted the notion of Apple gaining serious market share in the traditional PC space, but Apple Silicon is Tech media influenced. It’s hard to find reviews of Intel-based laptops that don’t compare them to the new MacBook Pro. And when it comes to energy efficiency, there’s no comparison.

But Mac Studio also leaves a lot to be desired in terms of graphics performance.

I’m happy with the power efficiency and processing power of my Apple Silicon MacBook Pro, but when I wanted to upgrade my desktop workstation, I built Mac Studio with Nvidia (NVDA) for my dual Ice Lake Xeon system. Graphics card RTX 3090.

But no HDMI 2.1. Source: apple.

The M1 Ultra is a clever combination of two M1 Max SoCs in the Mac Studio. Its CPU processing power is phenomenal and even surpasses my dual Xeon system in Geekbench multi-core. But when it comes to graphics, Apple’s claim at launch that it will outperform the 3090 isn’t over yet.

Several reviewers checked it out, so I’ll just refer to one, The Verge:

We ran Geekbench Compute, which tests the performance of the system’s GPU on both the Mac Studio and the RTX 3090, Core i9-10900, and gaming PCs with 64GB RAM. And Mac Studio was… destroyed. It scored less than half of what the RTX 3090 scored in this test – not only does it outsell Nvidia’s chip, it doesn’t even come close.

And it doesn’t even come close to most other practical use cases or benchmarks. Apple’s internal GPU dwarfs every other iGPU in the PC world, but it can’t compete with such large discrete GPUs as Silicon Foundry.

Aside from the lack of graphics performance, there’s another limitation of the Studio that Apple was a bit concerned about, and that’s the HDMI port. Apple doesn’t specify which HDMI version the Studio has in its specs, but it appears to be HDMI 2.0.

Graphics cards of the latest generation usually support HDMI 2.1. How important is it? HDMI 2.1 supports playback of 8K displays at 60 fps. There is no HDMI 2.0. Apple advertises that it can “output” 8K video, but this may only apply to transcoding within an editing app. You can’t actually watch 8K 60p video or play an 8K display at 60 fps with the Mac Studio’s HDMI port, although there may be an unsupported workaround for Thunderbolt.

Given that almost every PC workstation with current-generation graphics cards has HDMI 2.1 built-in, I find Mac Studio’s lack of HDMI 2.1 support almost unforgivable. 8K is clearly the future, and professional videographers have already migrated to 8K and 12K cameras and 8K displays. My own workstation runs an 8K60p display.

Why is it taking so long on Mac Pro?

That brings us to the long-awaited Apple Silicon Mac Pro, which will likely be free of Mac Studio’s shortcomings. I was a little disappointed that Apple didn’t preview the new Mac Pro at WWDC. It must have been a logical place they used for this purpose in the past.

That tells me Apple is still struggling with what the new Mac Pro should be. I think Apple wants it to be an all-in-one SoC design, maybe with multiple chiplets.

Current technology has focused on the CPU and GPU being discrete chips in separate packages. Even the most advanced supercomputer design concepts still use this basic division of labor.

So if Apple wants to build a truly competitive professional workstation, it probably needs to figure out how to house the discrete GPU in the Mac Pro. With that in mind, Apple must also decide whether to support third-party GPUs.

When Apple introduced the Mac Studio, they announced that the Mac Pro was still on the way (via Assurance) and that the M1 Ultra would be the last of the M1 series. To me this suggests that Apple realized back then (March 2022) that the current M1 series would not be suitable for the future Mac Pro.

Expect more advanced M2-series SoCs in the future to address the architectural issues I raised: support for more powerful graphics, more advanced display capabilities, and hopefully even higher CPUs. core counts. How Apple fixes these issues may still be in doubt within the company.

Meanwhile, Apple tends to be soldiers with the Xeon-based Mac Pros, who don’t seem to like any chance they get in favor of the Apple Silicon:

Source: apple.

Apple’s over-reliance on Intel’s Thunderbolt

To date, every Apple Silicon Mac has used Thunderbolt as its primary interface to the outside world. But Thunderbolt is an Intel proprietary technology, and behind every Mac’s Thunderbolt port sits an Intel chip.

This is another area where Intel’s separation is incomplete, and it provides an explanation for the HDMI limitation not only in Mac Studio, but in every other Apple Silicon Mac that has offered HDMI.

It seems that Apple plays HDMI videos through Intel Thunderbolt interface chips. Thunderbolt 4 tops out at a data rate (40 Gbps) that would be required for HDMI 2.1, so Apple can’t support HDMI 2.1 without completely changing the data path and creating a dedicated interface for it.

While Thunderbolt’s limitations may be acceptable for the M1-series Macs, it would obviously be a disaster to limit the Mac Pro’s external interface to Thunderbolt. Apple tried that with the cylindrical Mac Pro, and we all know how it works.

Perhaps some considered going ahead and marketing what would become Mac Studio as the new Apple Silicon Mac Pro. I’m sure when they introduced the device to some focus groups, it quickly became clear that professional users expected workstations with PCIE expansion capability.

Apple should shift its interface focus from Thunderbolt to PCIE. PCIE is more versatile than Thunderbolt and will be faster for PCIE Gen 5 x2 lanes and above. Almost every conceivable PC interface, USB, Ethernet, Wi-Fi and graphics is ultimately powered by PCIe.

Incorporating PCIE into its next-gen Apple silicon will not only free it from its dependency on Intel Thunderbolt, but also set it up to support the kind of Mac Pro that professional users want. This is an area where Apple should go with the flow. All modern x86 processors support the on-chip PCIE interface.

Investor Takeaway

The combination of performance and efficiency that Apple Silicon offers is truly unparalleled, but I’ve learned that Apple needs to do more to gain more PC market share.

Intel’s uncompleted divorce points to some weaknesses in Apple’s approach to silicon. It may not be technically possible to build an internal GPU that is truly competitive with a discrete GPU. But Apple has to deliver that level of performance somehow.

Thunderbolt is a useful interface that is very convenient and easy to use, but it is limited compared to PCIE. The bandwidth advantage of PCIE is not going to end any time soon.

If Apple introduces PCIE, it will have a direct opportunity to meet its GPU needs and provide a more powerful interface for all of its Mac products. With PCIE, Apple could finally complete its split from Intel, and Apple could further expand its market share for Silicon Macs. I long for Apple and just rate it.

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