The

Most Important Apple Executive Youve Never Heard Of

Bloomberg Businessweek
February 18, 2016

By Brad Stone, Adam Santariano, and Gwen Ackerman

(Modified for classroom use)

A little over a year ago, Apple had a problem: The iPad Pro was behind schedule.
Elements of the hardware, software, and accompanying stylus werent going to be ready
for a release in the spring. Chief Executive Officer Tim Cook and his top lieutenants had
to delay the unveiling until the fall. That gave most of Apples engineers more time. It
gave a little-known executive named Johny Srouji much less.

Srouji is the senior vice president for

hardware technologies at Apple. He runs
the division that makes processor chips,
the silicon brains inside the iPhone, iPad,
Apple Watch, and Apple TV. The
original plan was to introduce the iPad
Pro with Apples tablet chip, the A8X, the
same processor that powered the iPad Air
2, introduced in 2014. But delaying until
fall meant that the Pro would make its
debut alongside the iPhone 6s, which was going to use a newer, faster phone chip called
the A9.

This is the stuff that keeps technology executives up at night. The iPad Pro was
important: It was Apples attempt to sell tablets to business customers. And it would look
feeble next to the iPhone 6s. So Srouji put his engineers on a crash program to move up
the rollout of a new tablet processor, the A9X, by half a year. The engineers finished in
time, and the Pro hit the market with the faster chip and a 12.9-inch display packed with
5.6 million pixels.

Srouji runs what is probably the most important and least understood division inside the
worlds most profitable company. Since 2010, when his team produced the A4 chip for
the original iPad, Apple has immersed itself in the costly and complex science of silicon.
It develops specialized microprocessors as a way to distinguish its products from the
competition. The Apple-designed circuits allow the company to customize products to
perfectly match the features of its software, while tightly controlling the critical trade-off
between speed and battery consumption. Among the components on its chip (technically
called a system on a chip, or SOC) are an image signal processor and a storage
controller, which let Apple tailor useful functions for taking and storing photos, such as
the rapid-fire burst mode introduced with the iPhone 5s. Engineers and designers can
work on features like that years in advance without prematurely notifying vendors
especially Samsung, which manufactures many of Apples chips.

At the center of all this is Srouji, 51, an Israeli who joined Apple after jobs at Intel and
IBM. Hes compact, hes intense, and he speaks Arabic, Hebrew, and French. His
English is lightly accented and, when the subject has anything to do with Apple,
nonspecific bordering on koanlike. Hard is good. Easy is a waste of time, he says when
asked about increasingly thin iPhone designs. The chip architects at Apple are artists,
the engineers are wizards, he answers another question. Hell elaborate a bit when the
topic is general. When designers say, This is hard, he says, my rule of thumb is if
its not gated by physics, that means its hard but doable.

Srouji recently spent several hours with Bloomberg Businessweek over several days and
guided a tour of Apple chip facilities in Cupertino, Calif., and Herzliya, Israel. This was,
no doubt, strategic. Investors have battered Apple stock over the past year, sending it
down more than 25 percent. Most people are already pretty satisfied with their phones,
the criticism goes, and arent compelled to spend an additional few hundred bucks on an
upgrade. (In March, Apple intends to announce an updated iPad and smaller-screen
iPhone featuring the latest A9x and A9 chips, according to a person familiar with the
plans, who wasnt authorized to comment publicly.)

Apples usual response is to point to Jony Ive and his team of fastidiously cool,
Wallabee-shod industrial designers, or to highlight elegantly tooled aluminum or an app
or some new feature or gadget. Theres always something new to show off. But none of
that has ever explained anything about a crucial part of Apples profit machine: its chips.

I think its too good of a story not to be told at this stage, Srouji says. Hopefully, we
wont reveal too much.

When the original iPhone came out in 2007, Steve Jobs was well aware of its flaws. It
had no front camera, measly battery life, and a slow 2G connection from AT&T. It was
also underpowered. A former Apple engineer who worked on the device said that while
the handset was a breakthrough technology, it was limited because it pieced together
components from different vendors, including elements from a Samsung chip used in
DVD players. Steve came to the conclusion that the only way for Apple to really
differentiate and deliver something truly unique and truly great, you have to own your
own silicon, Srouji says. You have to control and own it.

One of Jobss trusted advisers, Bob Mansfield, Apples top hardware executive at the
time, recruited Srouji to lead that effort. Srouji, then at IBM, was a rising star in the
arcane world of semiconductor engineering. Mansfield promised him an opportunity to
build something from scratch.
The decision to design semiconductors was risky. About the size of a small postage
stamp, the microprocessor is the most important component of any computing device. It
does the work that makes playing games, posting to Facebook, sending texts, and taking
pictures seem easy. Small currents of energy move from the battery through hundreds of
millions of tiny transistors, triggering commands and responses in nanoseconds. Its like
an intricate city design that fits on the tip of your finger. When the chip isnt doing its job
efficiently, the device feels sluggish, crashes, or makes users want to throw it against a
wall.

If theres a bug in software, you simply release a corrected version. Its different with
hardware. You get one transistor wrong, its done, game over, Srouji says. Each one
of those transistors has to work. Silicon is very unforgiving. Among computer and
smartphone makers, industry practice is to leave the processors to specialists such as Intel,
Qualcomm, or Samsung, which sink billions into getting the chips right and making them
inexpensively. (Apple used to co-design processors for the Macintosh, but Jobs
abandoned the work in 2005 in favor of more powerful models from Intel, whose chips
still power all Macs.)

When Srouji joined Apple, the company had a group of about 40 engineers working on
integrating chips from various vendors into the iPhone. That grew by about 150 people in
April 2008, after Apple acquired a Silicon Valley chip startup called P.A. Semi, which
had a power-efficient semiconductor design. Sroujis team found itself interacting
regularly with other departments, from software programmers, who wanted chip support
for new features, to Ives industrial designers, who wanted help making the phones flatter
and sleeker. An engineer who sat in on Sroujis meetings remembers senior managers
preparing extensively for presentations, because his support was critical for getting new
features approved. He was known for peppering engineers with technically sophisticated
questions, particularly about contingency options if something didnt work out as planned.
Hed ask, for example, if a different form of plastic could be used that wouldnt interfere
with another component.

The first public signs of Sroujis work came in 2010 with the debut of the iPad and
iPhone 4. The processor, the A4, was a modified version of a design from ARM Holdings,
a British company that licenses mobile technology. The A4 was designed to power the
handsets new high-definition retina display. Srouji says it was a race to get that first
system-on-a-chip produced. The airplane was taking off, and I was building the runway
just in time, he says.

Over the next few years, Apple kept making improvements to its designs, introducing
chips to accommodate fingerprint identification, video calling, and Siri, the iPhones
voice-activated assistant, among other enhancements. When the companies using
Googles Android operating system started making tablets, they mostly used
conventional mobile phone processors. Starting with the third-generation iPad in 2012,
Sroujis team designed specific chips (the A5x and A6x) to give the tablet the same pixel-
packing high-definition screens as the iPhone.

These mysterious semiconductors coming from Apple were the curiosity of the tech
industry, but it wasnt until the release of the iPhone 5s in 2013 that rivals really started
to pay attention. The phone featured the A7 processor, the first smartphone chip with 64
bits double the 32-bit standard at the time. The new technology allowed for entirely
new features, such as Apple Pay and the Touch ID fingerprint scanner. Developers had to
rewrite applications to account for the new standard, but it gave way to smoother maps,
cooler video games, and generally more responsive apps that dont hog as much memory.

Qualcomm, then as now the biggest designer of phone chips, made the expensive
decision to scrap development of its 32-bit chips and put all its resources into catching up.
Handset companies all wanted the shiny new thing, says Ryan Smith, the editor-in-
chief of AnandTech, a website that publishes exhaustive reviews of semiconductor
designs. The A7 really turned the world upside down.

Srouji cant restrain a smile when recalling competitors reactions to Apples 64-bit
surprise. When we pick something, he says, its because we think theres a problem
that nobody can do, or there is some idea thats so unique and differentiating that the best
way to do it is you have to do it yourself.

One morning in February, Srouji conducts a brief tour of his domain, which is scattered
in unmarked locations around Silicon Valley. A shuttle bus leaves One Infinite Loop and
drives 10 minutes through a series of residential neighborhoods to a low-rise office
building near the Santa Clara city limits.

One of his deputies greets Srouji at the bus and badges through several locked doors into
a room where future chip designs are being tested. The building is eerily quiet and still,
save for the hum of air conditioners and the blinking red and green lights of large dark
boxes that are stacked together and resemble Zambonis. The room is Apple- white and
clean, but not tidy; thick wires and large plugs lie around. Old, unused Macs are lined up
on a shelf like books that have already been read. All the equipment is operated remotely.
The boxes are running software that scans for possible flaws in the chip architecture.
Testing proceeds for several days on one element of the chip, then moves on to the next,
and then the next, until the process is done, which can take months. We beat the silicon
as much as we can, Srouji says. If youre lucky and rigorous, you find the mistakes
before you ship.

In an adjacent room, circuit boards are wired together in milk carton- size stacks to
simulate the capabilities of a future iPhone or iPad. Apples software programmers,
sitting anywhere in the world, can remotely test how their code holds up against a future
chip design.
Then the shuttle takes Srouji a few more miles away, to another unmarked building,
where rows of customized Mac Minis are testing prototype chips under various
temperature and pressure conditions. Standing in an aisle, surrounded by exposed circuit
boards and digital innards, is like being inside the Matrix. No one has seen this before,
Srouji says.

Everything looks exceedingly complicated. Srouji wont discuss costs, but Apples
research and development expenses hit $8.1 billion last year, up from $6 billion in 2014
and $4.5 billion in 2013. Many analysts attribute the rise in large part to chip
development. All Srouji will say about his budget is that Cook doesnt scrutinize it. I run
it very tight, he says. I truly believe that engineers will do their best when they are
constrained by either money, tools, or resources. If you become sloppy because you have
too much money, thats the wrong mindset.

Apple isnt completely in charge of its own destiny. It remains in many ways a prisoner
of its supply chain. Displays come from Samsung, and cellular modems from Qualcomm.
Samsung and TSMC, based in Taiwan, still manufacture the processors. Apples ability
to keep up with demand is in part dependent on the production capacity of those
companies. It also lags behind Samsung in some areas of chip development, such as
adding a modem to the central processor to conserve space and power and transitioning
from a 20-nanometer chip design to a more compact 16-nanometer format, which means
even more transistors can be crammed into a smaller space. If I was just arguing
hardware and not Apples marketing, I would say Samsung has the best processor, says
Mike Demler, a senior mobile chips analyst at the Linley Group, a technology consulting
firm in Silicon Valley.

Or Apple could just be getting started. It relies on suppliers for Wi-Fi modems now, but
will it forever? I dont want to go into Wi-Fi specifically, Srouji says.

Apple could also take a page from Teslas playbook and start developing its own batteries.
I dont want to get into batteries too deeply, he says.

And since Apple is doing a fine job with mobile processors, it could conceivably decide
to get into conventional chips and bump Intel out of its Mac laptops and desktops. Srouji,
of course, wont go there, though he does allow that his teams mission is finite. If we
attempt to do everything on the planet, he says, I dont think that would be very smart.