Microsoft is currently re-evaluating its Surface product strategy due to rising component costs and competitive pricing from Apple's MacBook Neo. The company is considering a significant reduction in hardware specifications for its upcoming entry-level 12-inch Surface device.

The tech giant is also reconsidering its processor choices for this model. Previous reports suggested the device would feature AMD's first Arm-based laptop processor, codenamed Sound Wave. This chip is expected to be built on TSMC's 3nm process with a power range of 5 to 10W.

The rumored Sound Wave processor includes a 6-core Arm CPU, consisting of 2 performance cores and 4 efficiency cores. It also integrates an RDNA 3.5 architecture-based GPU with 4 compute units.

This strategic shift follows recent updates to the Surface lineup. On October 13, Microsoft launched the Surface Pro 12 and Surface Laptop 13, both equipped with Qualcomm Snapdragon X2 Plus processors.

The Surface Pro 12 starts at $1,149.99, while the Surface Laptop 13 has an entry price of $1,199. These updates occurred less than a month before the latest reports regarding the potential hardware downgrades.