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This is a very interesting question because making your own CPU and other chip is a very tough endeavor hence why there is no mass-produced PC maker does this. But Apple is not like other PC maker. “Think Different” and “Here’s to the crazy ones” was not just a marketing slogan, it is Steve Jobs (the founder of Apple Incorporate) fundamental approach to living and making a dent in the universe.
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Background story time
To understand why would Apple want to make their own processor, you have to understand how other PC-makers works. This is my own experience of 10+ years working in IT department from tiny company to multi-national enterprise. The scale is different, but the objective is the same.
For the masses, the computer is where they do the work or play the games. Most of the time, it’s for work and doing work is basically running Microsoft Office. I can tell you even in large companies, how entire departments and subsidiaries are run just using 4 apps, Word, Excel, Powerpoint and Outlook. How did this happened? Microsoft basically won the PC wars way back in the 80s and been king of the hill ever since.
Microsoft is built on Intel because that is what they have to play with during the late 70s and early 80s. Back then, there was a lot of UNIX vendors that does end-to-end stuff like HP with their HP-UX, Sun with their Solaris, and IBM with their AIX. Microsoft only play was software and they got a lucky brake when IBM wanted to build their PC and it was built on Intel. Microsoft manage to license and own DOS and basically corner the PC market. DOS becomes Windows and as Microsoft grew, so does Intel.
So the network effect dictates how 3rd party PC maker build their business. Everyone is using Windows so the cost of entry by making your own OS is high. Microsoft uses Intel so unless you can convince Microsoft to use an alternative CPU, better stick with Intel. AMD is always a niche player and don’t have the production muscle like Intel does. In the end, Dell, HP, IBM (later lenovo), Compaq (later HP), Gateway 2000 (dead) and others just build Intel PC w/ Microsoft Inside (tm).
Enter the iPhone
Apple on the other hand, after lost the PC wars got their butts handed over by series of mismanagement, bad products until the return of Steve Jobs. Steve Jobs know, while there are Apple cult memb…, I mean fans, it won’t be enough to grow or sustain Apple in the long run. Apple has to create their own new product and grow from there.
So after updating their Macs, they launched the first product that bring in the dough: the iPod. A revolutionary music player that have 1000 songs in your pocket. What’s important about this iPod is that is has an ARM chip that run things. So they are more familiar with ARM. So after the success of the iPod, Apple launched another product that basically changed the game and fortunes for Apple: the iPhone.
The iPhone taught Apple two things, the iPhone will make Apple rich beyond their wildest dreams and to make the iPhone compelling, they have to introduce features that only Apple can have. And to eventually have product features that exclusive to you, you have to design everything from the ground up. You cannot rely on anybody to make the CPU anymore. In the early days of iPhone, Apple actually asked Intel if Intel can make a powerful low power CPU for the iPhone, Intel declined the offer thinking there’s no money in making chips for phones.
So Apple has a feature sets that they want to implement: Touch ID, Face ID, 4K video processing and playback. HDR, computation photography, neural processing for ML and AR, secure enclave and others. To make all of this work, Apple would need to create their own processor to actually do it since the processor they need is not on the market. So, the A4 chip is born and later Apple build everything from scratch on the A6.
Lessons of the A-series vs the Mac
Over the years, the A-series has exploded Apple capabilities and bottom line. The A-series enable more and more feature sets on the iPhone and iPad and derivaties has enable Apple to create new products like the Apple Watch, AirPods, HomePods and Apple TV. Meanwhile, the Macs feature set has been stagnated. Some say Apple has basically abandon the Mac lineup in favor of iPhone but that is partly true. There only so much Apple can do with Intel in the Mac that they had to create a co-processor such as the T-series to add more features. Touch ID and on the fly storage encryption would not be possible without the T-series chip.
Another lesson that the A-series has taught Apple it is very possible to create powerful chip that uses low power consumption and have custom feature set with a price to match. Although Apple does not publish their prices for A-series or M-series chip, just looking at the logic board of MacBook Air in M1 vs Intel you can gouge the cost saving Apple gets by moving to the M1.
Apple make their own chips because Apple has a grand vision on how their products will look like, perform and work. To achieve such vision, Apple has to create their own chip because what they wanted is not on the market. In the end, their own chip provided the unique differentiator and the performance that they need.
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