Episode 991: How Apple’s new AI chip strategy affects your next Mac purchase

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0:31Unscripted, unfiltered, unafraid. Welcome to the Macworld Podcast. My name is Michael Simon and I am joined once again by my colleague Jason Cross. Good morning. And our producer, Roman Loyola. Oh, hi there. This is episode number 991. And today we're going to talk about chips.

0:57You know, I wrote a... I like Doritos. Yeah, yeah. So I wrote a bad joke here and I'm going to blame Roman for that.

1:06I've actually been listening to some of the older shows that we recorded because we're preparing for our thousandth episode in nine episodes. And some of his dad joke persona snuck into my self-conscious. So I did have a bad joke that Jason beat me to, which is fine because I didn't want to say it. But I did write it. I'll take the... I'll wear the dad joke mantle. But we are going to talk about chips, Apple's chips, M5, M6, M7, A20, Pro, maybe the S12.

1:40You know, all the stuff that's coming out. The roadmap is kind of funky with all the AI things and all the supply chain stuff. And there's just a ton of interesting stuff that's come out lately. So we're going to talk about all that. Then we'll do this week in Apple history and close, as always, with our comment corner. Speaking of comments, you can contact us through Blue Sky Facebook threads. Search for Macworld. Look for the Blue Mouse logo. Send an email to podcast at macworld.com. Send us a personal email. Comment under a video.

2:11Comment under a post. Let us know what you think. And we'll talk about one of... I'm sorry. I'm jumping your head in my mind and I'm trying to read at the same time. We will discuss them on a future show. You know how comments work. Yeah, I know. All right. So before the chip stuff, last Friday, like the tail end of our day last Friday, like 4.58 Eastern time or something, Apple filed a lawsuit against OpenAI, which is not uncommon.

2:49Just after the markets closed on Friday. That's how this works. That's right. So it doesn't affect the stock price until Monday.

2:56You know, it's not uncommon for Apple to sue people or get sued. Like it's usually it's just a ho-hum, you know, okay, great. But this one was super interesting. So they filed a lawsuit against OpenAI and specifically a couple of employees that work there, including somebody named Tang Tan, who was an Apple employee for like 25 years. And I'm just going to run down a couple of the things because... So something like 400 people have left Apple to go to OpenAI.

3:31But this guy seems to have been particularly insane. He was the VP of product design. So he was responsible for the design of a number of major Apple products. Yeah. So he was a big name, not just some low-level guy that left. I'm just going to hit on a couple of the points because, like I said, he seems to be particularly crazy. So for one, he kept his Apple issue. These are all alleged by Apple, you know.

4:04This is what Apple says in their suits. This is not OpenAI's response. This is not what the court has found. Discovery hasn't happened. This is Apple's suit, finally. So allegedly, he kept his Apple-issued laptop, which presumably a MacBook Pro or something. Two, he discovered a bug within that laptop that let him log on to Apple's private servers from OpenAI. Three, he downloaded a bunch of stuff from those servers onto his laptop, like design files

4:37and engineering files. Then he would have Apple employees come to interview for OpenAI and be like, hey, tell me what you're working on. Like, bring me some stuff. Right. Yeah. Not just tell me what you're working on, but like bring an offering of data. Yeah. It just seems to me like it's insane, right? Like, how do you... Assuming this is true, which I have to assume at least 95% of it is because Apple wouldn't...

5:10You know, Apple is exposing himself here. It's not... You think Apple will have logs? Apple will have network logs showing all the login and transfer. This seems like the kind of thing you can easily have evidence of. Yeah. And, but this guy, like, it's insane. Like, how could you do this stuff? You know, I work for a tiny little company and like, I wouldn't do anything. Like, I would be worried about my small little company and whatever... Your new company isn't paying you an insane amount of money.

5:42But that's the more reason to not do it. And equity to like, and you need a success. It's worth pointing out as we talk about this, that OpenAI, who's famous for ChatGPT, I think they shut down Sora, right? The little video thing.

5:58They're working on at least one hardware product. Right. With Johnny Ive, who appears to not have anything to do with this. That's sort of a separate thing. They're working on at least one hardware product that is, it's an AI interface thing, and it's a gadget that consumers will buy. It's not some enterprise whatever. Yes, they're contracting with Johnny Ive's company. Johnny Ive's not an OpenAI employee or anything like that. Right. His design company is being contracted for this and apparently doesn't really have anything. He's not named.

6:28He's not named or anything. That would be the craziest thing ever if Johnny Ive was using Apple. But that's what really all of this is about. It's not about AI code or anything like that or anything. It's about product, physical product design and engineering stuff. They have a big team working on a bunch of stuff. That's what this Tang Tang guy does. They hired him from Apple to make an Apple quality product. He's obviously not very good at it if he has to rely on what they're doing when he's not there.

7:01Well, or it could just be stuff he did while he was there that he has no right to own and he wants to grab. Sure. All that stuff's owned by Apple, right? So, yeah, it's crazy. There's a couple of other people named in the suit. Plus, they're just suing Open AI as a company saying like all these people they poached from Apple, normally when you hire somebody who works at another company, they get walked out of the company, right? They're like, we're cutting off your access. Okay, we're cutting off your access.

7:32Security will escort you out. They coached them. This is Apple's alleging. They coached them how to say you're leaving and give your notice and then you'll stay on for a week and all this so that you can download data and sneak it out for us. They apparently coached them how to leave the company in a way where you will stay on for a week or so and not get escorted out and be able to slurp up a bunch of data and bring it to OpenAI.

8:02Which, you know, if they have any evidence of that, that's... Yeah, it's crazy. Like, this could... I mean, maybe I'm naive, but this could probably... Maybe destroy is the wrong word. But certainly, like, wreck their public reputation. Assuming this goes to trial and assuming some of these things are proven, I mean, man. So, I was thinking, like, imagine Steve Jobs was CEO.

8:34Like, he would have, like, burnt down their building by now. Like, he was... You know, Tim Cook is a fairly measured person. And this lawsuit is explosive. Yeah. And apparently, they've been building this for a while. They say they contacted them privately months ago saying, hey, we have all this stuff. We know you're doing this. You need to stop it. And they just ignored them. So, OpenAI wants to go public. Right. And with this law... I mean, these things take...

9:04These lawsuits take forever. And especially since Apple wants a jury trial. They don't want an arbitration or anything like that. They want a natural jury trial. So, this could take forever. Yeah. But this is going to ruin OpenAI's IPO. Because if Apple has a good, strong case here, then this... I mean, this could destroy the company. It could, right? They're already drowning in debt. Like, the whole point of the IPO, if you're OpenAI, is to, like, raise a ton of public capital.

9:39Right. Because they're bleeding through billions like crazy. But they're a big brand and they're a big name and they have really good AI tech, right? So, wouldn't it be weird if the way this all shook out is that this damages the value of OpenAI so much that Apple buys them? Right. And just... Yeah. Yeah, that would be wild. It's not out of the realm of possibility. Even if they buy them just to not have them be a competitor.

10:11Like, they don't have to use any of their stuff, but just get it. Yeah, that would be way too expensive right now. Right. But if this suit starts going the wrong way and all of a sudden OpenAI is only worth, you know, $40 billion or something like that, that's a big purchase for Apple. Sure. But not for what they would be getting. Right.

10:29Yeah, it's... And I don't know what... I'm not a lawyer. I should call my brother. He's a lawyer. I don't know what that means for this guy. Well, there's a couple people named, like specifically named in the suit. Like, would they... I assume they go to jail for a bunch of years, right? Or they have to pay a hefty fine or something? I don't know. It depends. This is a civil suit. They're not being... Why is that criminal? Yeah, it's true. They're not being charged with a crime, but they can be referred to a criminal. The court can refer them for criminal charges. Right. Then the DA has to decide if they want to press charges and all that other kind of stuff.

11:02I mean, he's going to lose his job. He's going to lose a ton of money. Yeah, yeah. I mean, there's a bunch of things. Future earnings potential has taken a dip. If the court finds, really, in Apple's favor and finds that these things are true, then, yeah, this guy's life is ruined. Yeah. But he doesn't necessarily go to jail. The big money will come from OpenAI, the company getting sued for some portion of its...

11:36And OpenAI issued a statement, we have no interest in other companies' trade secrets who remain focused on building innovative technology that empowers people everywhere. Like, that's the quote. Like, that's not a quote that you say when someone says that you basically broke into their servers and stole a bunch of stuff. Well, they just, like, dropped a tweet. Like, their PR person dropped a tweet instead of, like, issuing a proper press release response and all that stuff. It was really... Nonchalance. These AI companies just, they just, everything they do is just, like, go, go, go.

12:07Just do it. Just go, go fast. Just, we have to, the only thing that matters is that we go faster, do more, build faster, get bigger. Right. Too big to, we have to get to too big to fail as fast as possible, right? I don't know. I don't think they've got to quite get there. They seem to be failing. The issue with all this AI stuff is there's no moat for anybody. There's five, four or five main sort of companies all building this stuff. And it's, there's nothing to stop anybody from going, like, I'm just going to quit my contract with these guys or my subscription or whatever and do the other one, right?

12:47Because they're all kind of building the same stuff, right? So, they're competing on quality, which is great. But right now, they're all losing money hand over fist, trying to snap up consumers. And, yeah, it's crazy. These lawsuits, especially when there's a jury trial, this is, expect, how long did it take, that Epic versus Apple stuff take? And it's still got, like, echoes going on.

13:18So, you know, don't expect this to be done this year. Don't expect it to be done next year. That suit is a little bit different in the sense that you're, like, people have, like, that's a, two sides have their opinion on how business can be conducted. Yeah, that's a major antitrust thing. Right. Even, like, the Samsung one. Like, it's like, well, Samsung copied what was public. This is like, dude, you broke into our servers. You stole a bunch of stuff. You coerced people to bring things out of our offices.

13:51Like, it seems like it's, like, open and shut. This is a very, yeah, it's less of a, like, how do you interpret this law? Right. Right. This is, like, we have evidence of your theft, you would think. Like, if they have that evidence, they better have that evidence. So, if they've got that evidence, this is, this could be, but who knows what the damages are going to be. That's Apple's game here. The thing that might happen most soon about this is that Apple may successfully be able to get an injunction to prevent OpenAI from releasing their hardware product until this case is settled that it is built on stolen technology and stuff like that.

14:37So, I haven't, I don't know that they've filed one. That's not part of the news yet, but it wouldn't surprise me if this year they file, they're probably waiting for the moment OpenAI announces it, and then they're going to file an injunction saying, like, the court needs to stop them from selling this. It's built on all our stolen technology, and we have a pending suit, right? So, yeah, it's going to be such a mess. But, yeah, it's exciting, because you rarely see, like, lawsuits like this.

15:10And then, to make the drama even better, like, OpenAI is Apple's partner in Apple Intelligence. Like, since iOS 18, they've had a built-in, in the settings in iOS, you can flick a switch and say, like, oh, you know, Apple Intelligence can't handle this, ask ChatGPT. Like, and you can log in your thing, and it's built in, it's so built in that everybody, all the other AI companies complained that, hey, how come I'm not built in?

15:41Right, right. Is that, that's still the case in iOS 27, right? Like, even with Siri AI, like, you can still, you can still ask. Yeah, I do believe that's, I do believe that's still in there, but it works differently. And Siri AI is good enough to, I've never had it go, like, asking ChatGPT. Oh, that's interesting, okay. Okay, but you can do that. Maybe it's not, maybe it's not part of that anymore. No, it is, it's under, there's a new heading called extension now. Oh, okay. And you can, oh, I have it, I don't have it enabled, is why it defaults to Beamoff.

16:13But, yeah, you enable, use extension, and right now the only extension is ChatGPT, but it's because it's now under this, like, extension menu. That's, that's what's giving everyone evidence that they're going to allow you to add other things as extensions if you want. But, yeah, but to the point, to that point, it's still the only one in there, and it comes, you, in iOS by default. You can just turn it on, you can log in your account if you have an account.

16:47I mean, so, yeah, so what's going to happen with that? Yeah, it's, yeah, so stay tuned. It's going to be, like, I really hope this goes to trial because it's going to be fascinating to hear, like, the ins and outs and the details of this thing. And plus, Apple is this massive company. Like, it used to be where you sued Apple when they were in danger of going bankrupt. Now they're like, well, whatever, we have hundreds of billions of dollars to go after you. We don't care. It's a cautionary tale, I suppose. People commit these crimes not thinking they'll get caught.

17:22If you're logging into Apple's private server, some open AI, how do you not get caught? It's a tech company. Like, someone's going to see that. You would think, yeah. Like, if you're transferring data. It's like, wait, why is this, why are there hundreds of gigs of files being downloaded to a different, to a different location? Like, no, it's not going to notice that. Okay, so, as you, as everyone knows by now, it's funny. A couple weeks ago, Apple raised prices on everything and, you know, it's like three weeks later and we're like, oh, so these are like, these are the prices now. Like, you know, this is how things become normalized.

17:55So, everything costs more. Macs costs more. iPads costs more. Yeah. The only thing that doesn't cost more is iPhones and Apple. Yeah. The big one, iPhones, didn't get a price hike. And we all know that that means. It's coming. Checks in the mail. Yeah, they're just not going to raise prices on existing iPhones. The new iPhones will have a higher price tag. There's no way, right? Yeah. So, I mean, the reason why all that stuff was raised is because of the price of memory. But it's more integrated into the whole development of Apple's chips because Apple's chips have unified memory, which is built into the chip.

18:35And, you know, it's a whole thing. So, it's all part of the supply chain of memory is all part of chip development. So, what we were expecting was that later this year, we would get the M6, the M6 Pro and the M6 Max chips, which is kind of how Apple has done it. Back in 2020, we got the M1, then 2021, we got the Pro and the Max. 2022, we got the M2, then the Pro and the Max. Like, they've kind of done this on an annual cadence.

19:06And we just got the M5 Pro and M5 Max back in March in the MacBook Pro. And we were expecting the M5 Ultra and the Max Studio would arrive shortly thereafter. It hasn't yet. And now that Apple has kind of signaled that there are issues, prices went up. Prices on high-end random storage went up even more. They cut off some of the configurations because they just can't fulfill these orders.

19:38Some models, if you try the bottom, you're not getting them until, like, September and October. Like, it's a mess. Mark Ehrman, who is plugged into all this stuff at Apple, he came out with the report, I think, last month. And then he added a few more details the other day. And so, in the fall, we allegedly will get the M6. However, the M6 Pro and the M6 Max are basically cut from the schedule.

20:08Like, it's just going to be the M6. Normally, we would see those in the spring. Right. That's what this year. We got the M5 Pro and Max in the spring. Regular M5 last fall. Yeah, they're changing up the schedule. They're changing up the schedule for everything. Yeah, for everything. So, the M5 Pro and M5 Max MacBook Pro that came out in March could theoretically be on shelves for, like, a year and a half to two years. Rather than the normal 12-month cycle.

20:39Yeah, like a year and a half. The report is that, partly because of the sort of RAM crunch and all that other stuff, but also they want to accelerate the release of M7 because it will have better AI performance. Like, significantly better AI performance. That, instead of the old schedule being M6 this fall, M6 Pro and Max in the spring, M7 next fall, M7 Pro next spring, Ultras another six months after the Pro Max.

21:11Right. So, they're going to do just M6 this fall. When they release the touchscreen, the new touchscreen MacBook Pros and stuff like that, they're going to build those on the old M5 Pro. That's what the reports are, yeah. And they're going to release the M7 in the spring instead of next fall. They're pulling it up by six months. And then next fall is going to be the M7 Pro and Max. So, everything's getting, the whole M7 generation is getting pulled six months closer, you know.

21:43And then there's going to be an M7 Ultra in 2028 that's for, like, Mac Studio and all that stuff. But they're going to be skipping M6 Ultra. So, yeah, the whole, an M7 Ultra is supposed to be, like, a really, really, really, really, really great chip for AI and stuff. Yeah, like Neural Engine and stuff, yeah. Neural Engine, great GPU, like, just a huge amount of, up to a huge amount of RAM and stuff. And that's intended to be not just for Mac Studios and Mac Pro, but to power some of Apple's servers, like AI servers.

22:20Right. That's the game. So, yeah. So, it's kind of exciting that M7's all being pulled in six months. The whole, that whole cadence is being pulled up six months. But it also makes you go, well, gosh, I don't want to buy a Mac this year. Like, why would I buy an M6 MacBook Pro or MacBook Air or something this fall if the M7, six months, it's coming right up. Yeah, it makes me wonder, like, maybe the M's, like, so, yeah, if we get the M6 MacBook Pro and MacBook Air or whatever this fall in six months, like, the report was confusing to me.

22:58Because, like, I understand the shifting of priorities. I understand how, first of all, RAM has upended everything. Two, the AI push, it's not going away. Like, Apple showed with iOS 27 Mac, like, they're going to play ball. And they have to get these things developed at a quicker pace. They have to, you know, get them out there. And, but, yeah, what I don't understand is how releasing the M6, like, why not?

23:28Here's a philosophical question for you, Jason. Okay. Why not just get, to skip the M6 completely. Right. And rename the M6, rename the M7 M6 and have that be the AI chip. Just wait. Just wait six months. Right. Just wait. Just stick with all these M5 products for another six months. Just call the M, what they're going to call the M6, call it M7. Yeah. I don't know why they wouldn't do that. Like, why even, why even release just an M6 that gets replaced six months later?

23:59For no reason. Yeah. When the M5 is perfectly fine. It's a very, very good chip. Everything's fast. No one's complaining about it. If it was on shelves for the rest of the year, it's, it's, it's totally cool.

24:10Yeah. And it's not like M, well, I mean, M6 will be better, but it's not like it's the, the products that that goes into. It's not like that's the, the bread and butter. It's not like, well, it's iPhone. We've got to get an iPhone out every year. We can't just wait six months to release a new iPhones. It's not that it's, it's Mac books. They, you know, they'd be okay. They'd sell a few less Mac books just hanging on the M5 generation, but you know, then the

24:41next generation will be there. So, I mean, I know they've already developed the M6. It's the chip development takes years. They're, they're getting test silicon back six months to a year before the products hit the market, you know, and stuff. So they've got M6 chips in computers, in Cupertino testing them out and, and, and built into like they're doing, they're already on test runs. They're like, it's, it's gone. So it is kind of throwing out a lot of work and a lot of time and stuff like that.

25:14But at the same point, like, yeah, like to, as you said, why, why do it for six months? Yeah. I mean, nobody's supposed to know, of course, they spoiled the thing. The M6 is supposed to come out and we're all just supposed to be like, this is the hot new thing for the next year. And, you know. Yeah. And it could be that German's timeline is slightly off and it's not six months, it's like 10 months. And it's close to a year. And they changed their mind. Things change. Sure. Yeah. And, and think, right. Things change. But the bigger one, you talked about it a couple of minutes ago, that we are expecting a touchscreen

25:48MacBook Pro this year. Still. Yeah. Late this year or early next year. Right. Right. It moves around. Yeah. So I hope the RAM doesn't screw with that because I'm, I'm very interested to see it, but supposedly that was going to have an M6 Pro M6. It's like, it's, it's a higher end, which I don't quite understand. We talked about this on an episode like six months ago. I don't quite understand why they're gearing this at pro users and not lower level.

26:18Like, I think the MacBook Air makes more sense as a touchscreen device than a MacBook Pro 16 inch. Yeah, I get that touchscreens cost more, but it's not that much more. And it's, yeah, it just seems they're aiming at the wrong audience, it seems. Yeah. But, but aside from that. MacBook Neo should be the touch computer. Right. Like, come on. That's the one. Yeah. Yeah. Charge $899 and you'd sell a million of them. But yeah. Right. So that was supposed to get M6 Pro M6 Max chips.

26:48That was the original rumor. And now that's supposed to get the same Pro and Max chips that are currently in the non-touchscreen MacBook Pros that came out a couple of weeks ago. I don't think that will affect any interest or purchasing. I mean, there's still good chips. I don't think it's going to matter. Yeah. What people care about, like a laptop's like a whole thing. It's not just a, it's the battery, it's the design. These are supposed to get a new design for the first time in a gajillion years.

27:19Yeah. The touchscreen has to, I guess, right? Well. I would assume. Maybe not. The, the, the, the screen itself does, but I mean the whole body, the whole body is supposed to have a new design for the first time.

27:31Who knows what new design means, but it's a new design for the first time in a million years. It's supposed to have dynamic island. It's, but it's got a whole new OLED display or tandem OLED display and touchscreen and all these things. Right. So there's a million reasons why you, you may want one that doesn't have anything to do with the M chip in it. Right. Um, and that's fine. And, and those will, those will hang around for a year because the M seven pro and max, cause they're skipping the six isn't supposed to come out till next fall. So those will be around for a while.

28:03It's the base level M six MacBook pro and air that, and I guess, Mac mini that will, only be around for six months before they get it. Will, will the air get, so the air came out. Yeah, it's true. Will they even do that? Right. The M six, the M five MacBook pro came out last October. The M five MacBook air just came out in March. If they come out with an air in November and then a pro, I swear they're just painting themselves into all sorts of corners.

28:33The numbers are the biggest problem until you Intel had it right. They would just randomly assign numbers to things. So there wasn't any chronologicalness to it. So now you're going to get an M five pro M five max, say the laptop costs $3,000, which it very well may. Yeah. And alongside that, you're going to get an M six MacBook pro that costs $2,000. And obviously the M five pro is starting at $1,899 or something like that with no touch screen, anything, and no redesign. Just, but, but with the, with the higher number chip, which obviously the M five pro is

29:07faster than the M six, but that's a whole nother thing that you got to explain. And it's just, I don't know the numbering. Yeah. The whole, the whole thing seems to be, and we've, we've, we've kind of been spoiled a little bit by Apple's cadence. Like they've been since the M series chips came out really since the A series chips came out, they've been solid every 12 months, 12 to 14 months. We've got a new one. Right. Yeah. They've been on the, basically the iPhone schedule, the early days of the M series, the

29:37schedule was a little weird, but they really kind of fell into a cadence after they got it all, got it all working. This isn't the only thing they're all mixing up to the whole Apple calendar has been pretty steady for a while. And this year, the regular iPhone, the, the iPhone, no air, no pro, no nothing, just an iPhone is not coming out or a lot of people buy. Yeah. Yeah. The big, the biggest seller, like it's not coming out till next year. Right. That's new. So that like the only new iPhones on sale are going to be like really expensive.

30:10They're going to be pros and the big folding ultra people. And maybe the air, the air might be next spring, but like everything's going to be like the cheapest new iPhone you're going to be able to get is at least a thousand dollars, but probably more, probably more because everything's going up. Yeah. And I tell you, there's about 80% of the iPhone buying population that are going to be like, what the hell? Why can't I buy my new phone that I've been waiting to buy? Where is it? Maybe. Because people don't follow rumors like we do.

30:40Most people don't. Right. And you know, the iPhone 17 was a huge seller. People who have an iPhone 14 are going to be like, oh, I want the 18. And well, where is it? I wonder. Apple can't explain like, oh, don't worry, it's coming out in six months. I wonder about that because I, I, I think that's true that people just don't pay that much attention to all these rumors. And I also don't think people don't pay that much attention to like what number iPhone they have or anything. But when one doesn't come out, they will.

31:11Right. That's what I'm saying. I don't really, I'm thinking about like my neighbors, my parents, stuff like that. They have a four-year-old phone. It's time for new phone. They go to the store and they just get the latest iPhone and they don't know that iPhone 17 has been out for a year and they're supposed to be an iPhone 18 by now. Where is it? Like, I don't think they know that. I think they just go like, oh, this is the latest iPhone. And they get that. Maybe. They're happy with it. So you're saying that Apple will sell a bunch more 17s in the fall?

31:44Like the holiday shopping season. Not more than they otherwise would. But I'm, and I think they'll, this will be great for Apple's sort of bottom line because Well, the average selling price is going to go way higher. Yeah. The average selling price is going to go up. All the advertising is going to be for these pros and the new folding phone is going to sell a lot at first, at least, you know, there's a lot of sort of pent up demand for folding iPhones among people who are willing to spend $2,000 on a phone.

32:17So, yeah, I mean, they're going to have a very good quarter economically, but I'm, I just wonder if among the 70 million iPhones that sell every, you know, quarter or whatever, I wonder how many of those people just really are like dialed in on what number iPhone is this? What year is it? Is this the latest one? I think they just go to the store and get like the latest iPhone. You're going to see iPhone 18 Pro and then you're going to see iPhone 17. Like you don't have to do a whiz to see that those are different.

32:50I, yeah, I don't, yeah, I mean, obviously, but, but like, but if you, but if you're rocking an iPhone 14, you're really just looking at the price and going like, oh, that's a new iPhone and it's $800 and whatever. And just, okay, I'll get that. So I don't, I do, I wonder how much it'll hurt. Yeah, we'll see. But I, I don't think it's going to hurt in the sense that sales are going to drop. I think it's going to hurt in the sense that people are going to be confused as to for the last 17 years or 18 years, a new iPhone has come out every single September

33:23and now it's not. And Apple, I don't think Apple's going to address that. Except for the E model. Like you would go in, like when the iPhone 17 came out and the 17 Pro and the 16E, like that's what was on shows, right? Yeah. You know, so it's kind of like that, but it's not the iPhone, the core model. United connects you to more of the world than any U.S. airline and United for Business can get your company where you need to go. Whether you're growing a business or managing travel for thousands, they offer solutions

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34:31Roman, I'm going to blame you for us getting off of chips as well. Oh, right. We were supposed to talk about chips. We kind of were supposed to talk about chips. We've been talking about iPhone. Let's talk about A20. Yeah, with the iPhone talk. So the A20 is the next chip. So based on what we know or what we think we know, the A20 Pro is going to come out in the fall and the A20 won't come out until next March or April. That seems likely.

35:03It seems like if the iPhone Air 2 comes out, and possibly whatever the iPhone Ultra is, that they'll do what they did last time, which is to have a version of the Pro, A whatever Pro, that just has like a GPU core disabled or something to keep the power and thermals in check on these super, super thin phones. So I think you'll get the Pro version of the chip only.

35:34In the fall. In the fall. And it will be the spring before we get a regular A20. A regular A20, which is different. I mean, they've never, as far as I can remember, they've never done that before. They never split up the A series chips before like that. Yeah, they did better because they never split the iPhones that way. Right, right. You'll get a pretty good idea of like what the A20 is going to be based on the A20 Pro. But yeah. So you want to talk a little bit? What do we expect from the A20 Pro?

36:06You wrote an article about, I don't know, two weeks ago that kind of gave like a preview of the speeds and the GPU and the cores. Yeah, that was just taking the trend of all the recent. Listen, it's amazing how when you map out the last, I don't know, eight years of iPhone chips, the improvement in CPU performance is super, super steady. It's like an escalator. It's like a straight line. Really is. There's not a lot of variance year to year. It's really impressive. So like if somebody said, well, the CPU will be like, what is the average 16% faster?

36:41Yep, absolutely. It'd be so weird if it was. I think from a marketing standpoint, they're going to go with this ultra core thing where they call the performance core. Super core. Super core. Sorry, super core. Where they call the performance core super cores. They just renamed it. I expect that, right? That's happening. They did that on the M series, but they're going to bring that to the pro A series chips. It's not a change in the chip. It's literally a change in the name. They just changed the name.

37:12The efficiency cores are performance cores and the super cores are performance cores. Yeah, what were performance cores. And they even admitted that because they changed an existing chip that they had already sold as performance cores and started calling them super cores. So there'll be that. It'll be 15%, 20%. Where it gets weird is like the GPU. Graphics performance and compute performance of the GPU varies a fair amount from year to year.

37:43Some years you get a big jump. Some years it's 15%. Sometimes it's like other years it's like 30%. They add a bunch of new features, a lot more memory bandwidth, whatever. I would expect that it probably will get a good boost because the GPU is used a lot in a lot of AI stuff. And just from an architectural standpoint, people aren't training AIs on their phones. But this architecture is used throughout the M series. So I think it's going to be, there's that, for the neural engine, for the series stuff, for everything else, they need a lot of memory bandwidth.

38:24And memory bandwidth helps graphics performance a lot. So I think the GPU will get a lot better. And there's definitely going to be a much better neural engine performance. Right. Like, that's the thing that runs all the models after they're trained and all that other stuff the most efficiently. Quick, quick aside. It was reported in that same German report that, so the neural engine is like a direct descendant of the Project Titan Apple car.

38:56And that whole project was all AI and self-driving. Yeah, that was reported years ago. He really brought that back. He brought that back around. Oh, I don't remember that. They talked about that year, back when they canceled the car project, and that was all, which was three or four years ago. They're like, well, what did they get out of it? And they're like, well, the whole neural engine really sprung out of that. I don't remember that at all. Yeah, they did. They brought that all up. He brought that all back around. He's like, yeah, that's how we got a neural engine in iPhone X, right?

39:28They started building that into their chips and started doing all this research into NPUs, neural processing units, which Apple isn't the only one who makes. Other people make them, but that's how they started putting them in all their chips. It's built into the architecture. Let's just do this.

39:46So, yeah, and like you said, AI is not going anywhere. They've known that AI is going to be a deep concern for a couple of years. These chips take a couple of years to design, but now we're in the point where like, when they were designing A20 Pro, that was after ChatGPT was huge. There's a big push for Apple Intelligence, all this other stuff. But, you know, they probably were like, AI performance needs to be our big thing. And that's probably what they're going to talk about more than anything.

40:16When they announce this and they talk about all the performance and it's going to be on pro phones and all this. So, I think it will still have 12 gigs of RAM, just like the current A19 Pros do. 19, yeah. It's supposed to have more memory bandwidth, like either with a shift to a wider memory bus or something like that. They're using a new packaging technology. Packaging is basically, the chip is a piece of silicon. So, packaging is like, well, how do you get it onto connectors for all the wires on the motherboard and protect it on top and communicating with other chips and all that other stuff?

40:55It's a very advanced technology. The area of chip technology is like packaging technology. It matters a lot for a lot of things. The main difference in this packaging technology they're using now is that instead of the RAM being on top of the chip to save space, the RAM is going to be next to it, which they've been able to do for a long time. In fact, old chips used to do that, but it takes more space, but it used to be like kind of slower. It was harder to get a high speed connection between the chip and the RAM chips and stuff.

41:29This will help them have that full speed, but have it off to the side like that. The practical application of how that helps you as a consumer is that when the RAM is not stacked on top of the CPU and GPU and all that other stuff, when it's off to the side, it's easier to cool all that. Okay. You're not loading all the hot chips on top of each other and trying to cool them with a small surface area. You have a bigger surface area and you're spreading out all the heat. That makes it easier to cool.

42:01So the pros will probably have that same thermal type of thermal solution that they had before. The vapor chamber cooling, maybe a new, more advanced second generation vapor chamber. They'll make some marketing, whatever. But it will probably be able to keep its cool under like high power use a lot. And it'll probably help with the super, super thin phones, which their main problem is they get too high.

42:32Right. Is there anything graphically that Apple would need to do to the A20 Pro for the rumored folding phone? Or does that really not have anything as far as like GPU power or efficiency or whatever else? Well, the phone when unfolded will be that that screen would be high resolution. But the current A series chips can already easily handle that for phone applications.

43:03Yeah. Right. For high-end 3D games at a higher resolution, yeah, you need more GPU power. They're going to have more GPU power. But that's not really the concern. And they also can already run kind of two screens at once, the inside and the outside screen. So there's nothing. I don't think there's anything special. There'll probably be some new display controller because the two screens and whatever. But nothing consumers care about. Right.

43:30I have a question. I asked Roman to remind me, and I actually wrote it down myself, if you can believe it. So RAM is like a mess right now. And there's only a couple of companies, SK Hynix, Samsung, Micron, that can deliver RAM. Is there a way that in the next three years, I don't know, five years, that Apple can make its own first-party RAM and cut out all of the suppliers that they need to buy from?

44:01Realistically, no. Okay. They don't make any chips. I know. Well, all right. Can they design their own to go with the M series? Oh, the design's not the tricky part. Okay. The design, RAM is very commoditized at these, at elite, weird HBM server chip stuff. It's, there's some, but the stuff that goes into your phone, LPDDR5X at these speeds or whatever, LPDDR6, it's fairly commoditized. They could easily design their own. It's manufacturing at scale.

44:32You have to manufacture in huge bulk. Apple has absolutely no experience really at all in running a chip. So TSMC couldn't do that for them? Sure, they could. Why would they? TSMC probably does make a ton of, a ton of RAM of certain kinds. HBM is the stuff that's worth more money to go into all these big server AI chips and stuff like that.

44:58So, but, but no, it's all the existing chip fabrication plants need to make more RAM. They can spring up new chips, new plants and stuff. But you're talking about Apple building a chip fabrication plant, which at light and speed takes two or three years. So you're saying that if Apple designed its own RAM, it wouldn't matter. It would still be just as expensive as it is buying it from someone else. Yeah, someone's got to, someone's got to manufacture it. And that's the bottleneck that's making RAM expensive is that there's no, there's, the demand is way higher than how much can be manufactured in the world.

45:32I got it. So we just need to build new plants. See, Roman, I told you Jason would know the answer to that question. We talked about it as soon as David was on the phone. Yeah, and there are new plants being built to expand RAM capacity and such. But it takes a long time to build a chip fabrication plant, man. It's, it's not an empty warehouse. It's, you know, there's water and electric supply lines and a bunch of very advanced machinery. And then just the people who need to work at it, run it, have very specialized skills.

46:03And it's, it takes years. Yeah. We don't have any indication that Apple is doing that at all, right? Even for the existing chips. No, what they're doing is they're investing in their partners who already manufacture chips to have them expand manufacturing in the U.S. They just announced that they were doing this with Broadcom. Broadcom makes radio chips. So Apple makes new modems. They make the N1 for Wi-Fi and Bluetooth. They make the C1. But there's still a bunch of radio chips that are needed to control antennas and all this other kind of stuff.

46:36They get all those, they get a lot of that from Broadcom. They'll be buying billions of dollars worth of Broadcom stuff for years to come. And Broadcom has a chip manufacturing plant in Colorado. And Apple's helping invest in Broadcom to expand that plant to build more chips here. And they could do that kind of thing with RAM. That's what would likely happen is they would partner with Micron to expand RAM fabrication in the U.S. or something. Got it. But they don't want to do that because they don't build their stuff in the U.S.

47:07They want the chip fabrication. They want RAM to be built in Taiwan where all their stuff is put together, you know, or India.

47:17And for all we know, they're working on all that. They just haven't issued a press release yet. The lawyers haven't gotten done with all the legalese and all the bean counters aren't done. But we'll see an announcement about expanding, you know, more American chip manufacturing in the future from Apple from an investment. Yeah. I mean, I'm sure there's a plan in place. Maybe not in place, but there's the concepts of a plan. Because, like, they can't just raise prices every six months when things get out of hand.

47:50That's the, yeah. And not just from Apple. Like, the whole industry basically right now is, like, scrambling. Yeah. It's in a weird place. The people who make RAM are really happy because they can charge a premium price they've never been able to charge. But everybody else is really mad at them and really needs them to manufacture more RAM. So there is an effort globally to manufacture more RAM. But building chip manufacturing plants takes time. So that's why everyone's like, it's going to be two years before we get any relief from this.

48:23Because that's how long it takes to spin up new plants and get them running and get them scaled up to running smoothly at speed. And all that other, you know, cranking out millions and millions of chips every week. You know, that kind of thing takes a lot of time. Yep. All right. It's going to get worse before it gets better, everybody else. Yeah, well, that's for sure. Yeah.

48:47So that's, we didn't get to the S12. We didn't get to HomePod. We didn't get to Apple TV. I had so many questions for you, Jay. We're going to have to pick this up on a future show. S12 is just going to be like S11. Here, we're done. There's no change. Do you think there's going to be more neural stuff for Siri AI? Like enhanced whatever? In this year's Apple Watch chip? No. They might market that it has four neural engines, but then you'll look closely and it's, oh, that 11 had that, you know.

49:18I think it's going to be the same. Yeah. Okay. I think we're in for the, like the, or not, not, not the same, but it's like, it's, it's 10% faster because we have a new manufacturing process. You know, it's not going to be some major architectural design where it's like a new, when did they do that last? When was that big leap S8 or something like that? Yeah, I would think it was the eight. Yeah. And then we got like three years of, they put a new number on the chip. Oh no, it was the, it was the nine. It was the S9 that did it. Okay. Right. Roman, am I right about that?

49:50And then the nine, 10, and 11. Yeah, it was the, it was the S9. I just looked at it. Okay. Right. Cause that's the cutoff for the watchOS 27. And then the nine, 10 and 11 were like the same chip with a different stamp on practically. And I think the S12 is going to be in that vein. I think it's going to be at best a very minimal upgrade. That's not going to enable magical new capabilities. And then I think next year is supposed to be some kind of big thing.

50:22We keep hearing, this is the, how manyth year in a row we hear about a big Apple watch redesign upgrade thing happening. And that'll come with a new chip design. I bet. Sure.

50:35Okay. Okay. Well, that's, that's the chips. The roadmap is going to be a little funky for the next. It's going to be weird and it's going to keep changing. Yeah. Like if you're listening to this two months from now already, all the new rumors have been validated. Everything we said, like it's all going to, it's going to keep changing on you. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows.

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52:00All right, Roman, what do you got for us? Okay, let's talk about Apple history. Um, so this actually was on July 9th, 2008, Apple opened the app store for the iPhone. Uh, it required an iPhone 3g and the iPhone 2.0 operating system. Uh, the app store came after initially Steve jobs said, nope, no third party apps on the iPhone.

52:30Yeah. It's going to be an isolated thing. And then some internal pressure came around. I know Phil Schiller was kind of like a big advocate for an app store. Uh, I believe some board members too, where I'll kind of like, we need to have this as a great revenue opportunity. I mean, the original iPhone had all these great apps. Like we had never seen before on a phone. And then they're like, oh, if you want to use anything that isn't these 10 apps, you have to go to like a Safari webpage. Right.

53:00It's like, well, what the hell? It just sucks. It was all about web apps. Yeah. And they were, none of them were good and they were wonky and they were buggy and they didn't have the proper touch stuff. Like they were not good. No one used them. No one cared. Yeah. Steve jobs really felt that web apps would be a proper solution. I mean, they essentially are web apps, but they're designed nicely and they work in a little self-control, little, little bubbles. Yeah. They had a whole separate little SDK that gave people access to the hardware in a way

53:33you wouldn't get on making a web app. Yeah. Right. So I looked up our original story, Roman, as you probably did too, but there were 552 apps at launch. Did you have that? Did I steal that from you? It's free, it's, you know, it's open information. So it's not like proprietary. Yeah. But it's nice to, it's nice to drop it on the audience. They think, they think that, that, that, that we're smarter than we are when we have these facts and figures. Well, 135 of them were free apps.

54:08I thought they were way more than free apps. Yeah. I thought there were more to that too. The ratio really changed like everybody early on, there were no subscriptions. So, and, and I don't think, I don't remember when in-app purchases started, but that was another year or two before that ever happened. So there was just a ton of like $1.99 apps and like $2.99 and $4.99. That, like, even though it's like, like iBeer and stuff, I think those are like a buck. Like you had to buy a dollar.

54:38There were a whole bunch of things that were just like $0.99. Yeah, yeah, that's true. Then it went on to be like a big revenue generator. And I think it was reported that Steve Jobs was actually kind of a little surprised at how well it, it, it, it did. The, the app store kind of has this, you know, it's great in terms of what you can do with it on your iPhone, but then there's a kind of this developer side and more, I'm more speaking about, you know, Apple's cut and that's been kind of the thing that's been like a persistent,

55:10uh. Yeah, it should. I mean, I'm not, I'm not a developer. I'm just a consumer, but I don't think there's any reason why Apple shouldn't charge. I mean, maybe 30% is too high. I don't know, but they're providing the storefront. They're providing the backend, everything, the security, the, the delivery system, the promotion, everything. I don't think it's so bad that if you create an app, the Apple should take a fairly sizable portion of that revenue.

55:40Yeah, that's common on all sort of app distribution storefronts. The argument is that you have no option. Okay. Like on a Mac or PC or anything else like that, you, uh, there are different storefronts. If you don't like Apple's cut, sell it on a different storefront or something, sell it directly over the web. You can't do any of that on an iPhone. That's the, the trick is that they, it, you, you agree to Apple's terms about the cut, but

56:12also about content that you're allowed to do and everything else, or you just don't get to sell your app to more than a billion customers. And so that really is, that's the argument more than that. It's not that it's 30%. It's that it's 30%. Take it or leave it. You can't go anywhere else. You can't, nobody can offer a better deal to you to distribute your app or anything like that. That's where they're getting in trouble with sort of antitrust stuff.

56:42Yeah. It's the steam takes 30%, although all of these things are wonky, you know, there's deals for small developers, the first million copies and are at a lower rate, all the other, whatever things that go on. But nobody complains about that because there's a million other ways to sell games or anything else on a PC other than steam. If you don't like steam, go to Epic game store, sell it yourself on the web, humble bundle,

57:12whatever you want to do. Yeah. No, yeah, that's that. Yeah. You're right. That's the heart of it. That's the heart of it. Yeah. Yeah. The, um, can we just quickly back up Roman? Um, the app store was not available for the original iPhone that came out a year prior to the app store. That's, that's crazy to me. Like, I understand why logistically it might not work, but it's so crazy to me that if you bought an original iPhone, that wasn't cheap, mind you, they were 600 bucks on contract.

57:44You were locked out of like the best part of the iPhone until you upgraded to a, to a