On July 12, Apple (NASDAQ:AAPL) announced updated versions of its high-end MacBook Pro computers with significantly improved internals. The systems incorporate faster processors -- Apple claimed a 70% boost on the 15-inch model and a doubling in performance for the 13-inch variant -- as well as support for greater memory (32 GB of DRAM from a 16 GB maximum in the prior model). The systems also incorporate Apple's T2 companion chip as well as True Tone display technology.
In the 13-inch models, Apple uses the Iris Plus graphics that are integrated inside of the Intel processors, but for the 15-inch systems, Apple uses discrete graphics processors from Advanced Micro Devices (NASDAQ:AMD). The versions that Apple announced back in July -- and the ones that are available for sale -- can currently be configured with AMD's Radeon Pro 555X graphics or a higher-end version known as Radeon Pro 560X. These are both based on the company's older, lower-end Polaris architecture.
Apple recently announced that, beginning in late November, it would allow buyers to configure the 15-inch MacBook Pro with AMD's newly announced Radeon Pro Vega 16 or its higher-end counterpart, Radeon Pro Vega 20 -- higher-end graphics processors compared with the Polaris-based Radeon Pro 555X and 560X parts.
Let's go over what this means for both Apple and AMD.
A win for both
To the extent that it can sell more expensive systems, Apple's Mac-related revenue and, presumably, profit stand to benefit.
When I go to Apple's website, the company lets customers choose from two 15-inch MacBook Pro systems to customize. The first comes with a 2.2 GHz six-core CPU, Radeon Pro 555X, and 256 GB of storage starting at $2,399. The second has a faster six-core CPU running at a base speed of 2.6 GHz, Radeon Pro 560X graphics, and 512 GB of storage for $2,799.
The $2,399 model can only be configured with up to the Radeon Pro 560X, which means that anybody who wants to get their hands on a Radeon Pro Vega-based MacBook Pro will also have to buy a system that fundamentally starts at a higher price. That's a clear win for Apple.
As far as AMD is concerned, keep in mind that every time Apple sells a 15-inch MacBook Pro, AMD already gets a graphics chip sale. The difference now is that if a customer picks a MacBook Pro with a Radeon Pro Vega, not only should Apple benefit by selling a pricier system, but AMD should benefit, too, by selling a pricier graphics processor.
Putting it all into context
Apple offering higher-end configurations of its MacBook Pro with AMD's Radeon Pro Vega graphics chips is a nice way for Apple and AMD to sell pricier systems and graphics chips, respectively, but this isn't a game changer for either company.
Remember that during its fiscal year 2018, Apple shipped around 18.2 million total Macs. That figure incorporates shipments of a wide range of Mac laptop and desktop products. Shipments of the 15-inch MacBook Pro make up just a fraction of that total and shipments of the highest-end models with maxed-out graphics likely represent a fraction of those shipments.
Ultimately, this announcement isn't something that should have a meaningful impact on the investment theses around either Apple or AMD.