Apple turns defective chips into best-selling products, saving billions

The Wall Street Journal has revealed how Apple is using chips with minor defects to manufacture more affordable devices, turning what would otherwise be wasted silicon into a significant source of profit.

A clear example is the $599 MacBook Neo. The laptop runs on the A18 Pro chip, which first appeared in the iPhone 16 Pro, but with one key difference. The version used in the Neo features a 5-core GPU instead of the original 6-core configuration. The defective core is simply disabled, while the rest of the chip continues to operate normally inside a less expensive product.

The approach is a standard practice in the semiconductor industry known as binning. Chips produced on the same silicon wafer vary in quality, and rather than discarding the weaker units, manufacturers route them into lower-tier products. The best chips go into flagship devices, while the rest find a home in more affordable models.

According to WSJ, Apple has applied the same strategy across six consecutive generations of its A-series chips since 2021. Chips with one disabled GPU core have repeatedly moved from flagship iPhones into more accessible devices. The A19 with a full core count powered the iPhone 17, while the version with one disabled core ended up in the iPhone 17e. The M-series for Mac follows a similar pattern, with chips containing a defective core appearing in the cheaper iPad Air roughly two years after debuting in the MacBook Pro.

The MacBook Neo turned out to be so popular that Apple exhausted its supply of repurposed chips and had to commission new orders, according to WSJ sources in the supply chain. The strategy also helps Apple win over Chromebook and Android smartphone buyers, while competitors continue to lose margins amid rising memory and storage costs.

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Durov's CodeDaria Ivanova

The practice dates back to Apple's first in-house chip, the A4. Units that drew too much power to be viable in an iPhone turned out to be a good fit for the Apple TV, since the device stays plugged into a wall outlet. The same logic later applied to S7 chips that didn't meet the efficiency standards required for the Apple Watch, which ended up powering the second-generation HomePod instead.