Mac sales have tanked, forcing Apple to temporarily halt M2 chip production

The Apple M2 chip and the Macs it powers are definitely some high quality hardware, but not enough to entice enough customers to buy them, forcing Apple to scale back production of the chip and pausing production for two months entirely to match the lower demand.

Apple hasn’t said anything publicly about the chip production halt, which apparently took place in January and February before resuming in March at half the rate of M1 chip production during the same period last year. Supply chain reports, however, indicate that Apple’s third-party suppliers and vendors have felt the pinch as a result.

The Elec is reporting, via 9to5Mac, that while both Apple and Apple chip fabricator TSMC, have been tight-lipped about the pause of the 5nm SoC, The Elec was able to track down other suppliers in the chain who were able to provide information and numbers showing the chip pause during those months.

These are mostly firms that perform post-fabrication work on the wafers from TSMC before they’re installed in Macs at other assemblers, and for at least a few of the firms that The Elec spoke to, they had not received any M2 wafers from TSMC in January or February. One supplier, Amcona, was apparently badly hit by the pause, as it has a line completely dedicated to Apple chip packaging that sat idle for two months. 

Why was M2 chip production halted?

While there has been no official word on the chip pause — and we haven’t been able to independently confirm these reports here at TechRadar, so take everything with a grain of salt — Apple itself has confirmed in its Q1 2023 earnings report that Mac revenue declined pretty dramatically late last year (Q1 2023 ran from the beginning of October to the end of December 2022).

In Apple’s Q1 2023, earnings on Mac sales came in at $7.7 billion, which was down from $10.9 billion from Q1 2022, which was an all-time high for the company. Apple’s CEO Tim Cook says that these revenue figures are in line with expectations. “We also faced a challenging macroeconomic environment and foreign exchange headwinds,” Cook said. “We remain confident in and focused on the long-term opportunity for Mac.”

Still, if the roughly 30% decline in Mac sales was expected, there shouldn’t have been a pause in chip production, as the company would have anticipated the number of chips it needed earlier and ordered fewer wafers with TSMC as a result. The last thing any company wants to do is leave its suppliers like Amcona with idle production lines that could threaten their business interests, as that might force them to reconsider dedicating a line specifically to Apple products.

As for why sales of Apple’s latest Macs would be slower than in the previous year, the Apple M1 lineup, including the M1 Pro and M1 Max MacBook Pro models in addition to the M1 MacBook Air (which is arguably the best laptop on the market for most users even now) might have produced a level of market saturation that dampened excitement for Apple’s M2-series Mac products.

If there were any fence-sitters who were still on older Intel-based Macs, they would have made the jump when the M1 chip was launched, and the M2 chips, despite being excellent SoCs, aren’t that much better than the M1-series chips they are replacing. If you’ve spent $3,000 to $4,000 dollars on an M1 Max MacBook Pro, you’re not going to spend that same amount of money a second time less than two years later for a performance boost of 10-15% in most cases.

Does that spell trouble for a possible M2 iMac at WWDC 2023? Probably, as reports that the new iMac (2023) will launch with a new 3nm M3 chip later this year seem even more prescient if the M2 chip isn’t generating the kind of excitement that the M1 chips did back in 2020 and 2021. We’ll have to wait and see what comes out in June at WWDC 2023 before we know anything for sure.

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