Apple turns manufacturing defects into profit: how the company uses “defective” processors

Apple has for many years skillfully turned chips with factory defects into the basis for more affordable devices. Instead of sending defective chips for disposal, the company partially disables faulty blocks and releases budget models of Macs and iPhones based on them. This was reported in detail by The Wall Street Journal, citing informed sources.

MacBook Neo and the “cut-down” A18 Pro

One of the most recent examples is the MacBook Neo — an inexpensive laptop in which Apple used A18 Pro processors originally intended for the flagship iPhone 16 Pro and Pro Max models.

In the standard configuration, the chip has six graphics cores, but in the laptop only five are active. The company used chips with a defect in one GPU core. This approach allows it to significantly reduce the cost of the device while maintaining an acceptable level of performance for the target audience.

The strategy works across the entire lineup

A similar practice is used in smartphones of the new generation.

The iPhone 17e received processors that did not pass selection for the main iPhone 17 model.
For the iPhone Air, chips are used that were rejected during production of the more expensive iPhone 17 Pro — they do not meet the strict requirements of the flagship in terms of performance or energy efficiency.

In this way, Apple creates a clear segmentation of its product line: the same silicon crystal can become the basis for both premium and budget devices.

A tradition lasting more than ten years

According to sources at WSJ, this strategy has been used by the company since the first proprietary processor, the Apple A4, which was installed in the iPhone 4. It was already then that some defective chips were redirected to Apple TV, where performance requirements were lower.

Since then, the approach has only been refined. Modern binning technology allows Apple to accurately determine which cores or blocks can be disabled in order to produce a fully functional but cheaper product.

Economics and ecosystem

The use of defective processors solves two tasks at once. First, the company minimizes losses from manufacturing defects. Second, it gains the ability to offer relatively affordable devices that attract new users into the Apple ecosystem.

According to WSJ, these users often later become customers of highly profitable services — iCloud, App Store, Apple Music, and other subscriptions. It is the services that today provide the company with stable and very profitable revenue.

In short

Apple systematically uses processors with factory defects, disabling faulty cores and blocks to produce more affordable devices such as MacBook Neo, iPhone 17e and iPhone Air. This practice has existed since the A4 era (iPhone 4) and allows the company to reduce losses, minimize waste, and expand its ecosystem audience, which later generates profit through services.