Trend towards In-house Processor Design Spreading
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
Compared to competing products, Apple’s M1 Pro/Max processors (announced on Oct 19) boast superior performance. We expect the trend towards in-house design of processors to spread moving ahead.
M1 Pro delivers 70% higher performance vs competing products
On Oct 19, Apple unveiled its self-designed M1 Pro/Max processors. The products represent high-end versions of the M1 processor Apple announced in Nov 2020, which received great acclaim from the market. Thanks to the adoption of system on a chip (SoC) architecture, the chips support up to 64GB of integrated memory. Offering 400 GB/s of memory bandwidth, the processors outperform the previous M1 by 70%, with up to 6x the memory bandwidth. The robust memory bandwidth of the high-performance HBM2, which is mainly mounted on servers, is facilitated through integrated memory design.
According to Apple, the M1 Pro delivers up to 1.7x the performance of the latest 8-core notebook PC processors from Intel and AMD at the same power level while achieving the peak performance of competing PCs with up to 70% less power. The M1 Max is equipped with a 32-core GPU, which delivers 4x the graphics performance of the M1. Both products are manufactured on TSMC’s 5nm process
Trend towards in-house processor design is spreading
Demonstrating semiconductor design capabilities that outstrip those of competitors such as Intel and AMD, Apple announced its own M1 processor one year ago. Apple PC shipments grew 46.1% y-y in 1H21 on the strong popularity of the M1 chip. Through the recent M1 Pro/Max announcement, it has been confirmed that Apple’s designs can be extended into high-end products.
Given the success of Apple’s M1 processor, it is expected that IT companies will increasingly opt for their own self-designed processors rather than off-the-shelf alternatives. Compared to using an off-the-shelf processor for hardware and in-house developing software, Apple’s choice to design both the processor and software has demonstrated a competitive edge. Currently, Tesla and Amazon have developed their own processors and are installing them in their products. Beneficiaries of this trend include Synopsys (develops EDA tools used in semiconductor design), TSMC (manufacturing its self-designed processors), and Samsung Electronics (SEC), among others.