Apple Halts M2 Chip Production as Mac Revenue Falls Dramatically

A recent report from the supply chain has revealed that the production of M2 chips was halted entirely in January and February. This was due to the limited demand for the Macs powered by the M2 chip. It is believed that this is the first instance where Apple has stopped producing chips for their current-generation products.

Although the production has now resumed in March, it is said to be running at only 50% of the level of M1 chip production during the same period last year.

Apple has reportedly stopped production of its M2 chip series, which powers its latest MacBook Pro, MacBook Air, and Mac mini models, due to plummeting sales and a severe PC market downturn. The Elec reports that production of the M2 chip was completely halted in January and February, marking the first time that Apple has ever suspended chip production for its current-gen products. While production resumed in March, it is reportedly only operating at half the level of M1 chip production during the same period last year.

According to the supply chain report, TSMC usually sends the wafer-processed M2 chip products to Amkor Technology’s Korean factory for packaging. However, during January and February, no such products were sent, leading the package material parts company for M2 chips to stop supplying the usual materials.

Apple saw a 30% increase in iPad revenue, which can be attributed to the release of new M2-powered iPad models. But, Apple’s Q1 earnings showed a significant decline in Mac revenue from $10.85B in the final quarter of 2021 to $7.74B in the same quarter last year, which corresponds with the decline in demand for M2-powered Macs.

During his Q1 2023 earnings call, Apple CEO Tim Cook acknowledged the challenging situation, attributing it to the difficult comparison to the previous year’s successful launch of the redesigned M1 MacBook Pros, as well as the industry’s contracting nature and foreign exchange headwinds. Cook stated that Apple is well-positioned in the market strategically, but anticipates a rough patch in the short term due to the challenging macroeconomic environment in the PC industry.

Apple introduced the M2 processor in June of 2022, which made its debut in an upgraded 13-inch MacBook Pro and a new MacBook Air. In January 2023, the company expanded its M2 lineup with the introduction of M2 Pro and M2 Max variants, which were featured in the 14-inch and 16-inch MacBook Pro models, respectively. Additionally, Apple made the M2 and M2 Pro chips available as configuration options for its Mac mini.

Source: The Elec

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