Apple reportedly orders fresh A18 Pro silicon as MacBook Neo demand surges, $599 price point may be at risk

Apple is becoming a victim of its own success with the MacBook Neo. Demand is outstripping the supply of binned A18 Pro chips that power the Neo. As a result, Apple has tapped chipmaker TSMC for a dedicated production run. However, rising silicon and DRAM prices in the past two years may jeopardize the device's aggressive $599 price point.

The MacBook Neo is emerging as a disruptive force in the laptop market, posing a serious threat to budget Windows and Chromebook devices. Contrary to expectations, the Neo brought in more users than any Mac device during launch week. It uses a binned variant of the A18 Pro SoC, which is the same silicon found in the iPhone 16 Pro.

Specifically, Apple is repurposing chips that didn't meet the full six-core GPU specification, instead utilizing them as five-core units for the Neo. This inventory likely dates back to production runs from late 2023 through 2024, aligning with TSMC's N3E node entering volume production in late 2023.

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While this means we'll see more MacBook Neo supply, Apple will likely have to pay more per chip than it did two years ago. One major factor is DRAM pricing. The A18 Pro uses InFO-PoP (Integrated Fan-Out Package-on-Package), meaning the DRAM sits directly on top of the SoC. Original A18 Pro units used 8GB modules bought before the memory shortage. New production runs will be subject to new pricing, where a single 8GB LPDDR5X module now costs much more than it did two years ago.

Another factor is the ongoing shortages at TSMC. Even though N3E yields are high, Apple is now competing with a surge in AI chip demand from NVIDIA and AMD. To diversify production, Apple is exploring alternative manufacturers for future SoCs. Intel Foundry is rumored to be a potential supplier for the A21 SoC.

Much like the 256GB Mac Mini M4, Apple may discontinue the $599 base variant of the Neo and force users toward the $699 512GB model. The report claims the impact could be softened by introducing new colors alongside the existing Citrus, Blush, Indigo, and Silver chassis options.

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A hike to $700 or more puts the MacBook Neo in a more hostile market. Internally, it risks severe product cannibalization. At that price, savvy shoppers can often buy a discounted M3 MacBook Air with 8GB of RAM or opt for a refurbished M2 Air with a much more comfortable 16GB of RAM.

Externally, the Neo would no longer be trading blows with Chromebooks, as it'll have to fend off Snapdragon's X2 family and AMD's Kraken and Gorgon Point, alongside a barrage of Intel Lunar Lake laptops.