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I think they can probably outright buy TSMC barring national security concerns for Taiwan. Market cap is $570B for TSMC. Of course that would never happen but i

I think they can probably outright buy TSMC barring national security concerns for Taiwan. Market cap is $570B for TSMC. Of course that would never happen but interesting to see how much cash AAPL has.

jbverschoor 5y ago
Doesn’t Apple already own machines? That’s what they usually do. They buy machines and let other companies operate them.
- my123 5y ago
  Not in the case of TSMC, no.
  - slownews45 5y ago
    They've been known to front load order / commit with cash upfront to key suppliers to both lock in supply and basically fund supplier capital purchases. Are you SURE that they haven't done that with TSMC? They can back up their commitments with cash to help suppliers deliver the capacity / volume they need (which is high). This then pays off in terms a more predictable supply chain (ie, they want to launch iphones in fall with generally absolutely cutting edge process nodes).
    - kergonath 5y ago
      AFAIK they put a massive order with TSMC and paid upfront to get all the production of their new line for a while, but I haven't seen anything indicating that Apple owns the machines. At least in this case: they did own the production lines in other cases, such as screens at some point IIRC.
      - slownews45 5y ago
        Which would make sense - the scale of these orders / capital commitments is enormous and this allows Apple to get value for its cash and use that as a competitive advantage against random joe blow companies without nearly the capital resources apple brings.
    - jdminhbg 5y ago
      Apple definitely has pre bought TSMC’s entire new process runs, but the poster above was talking about a different arrangement, where Apple buys and owns actual machinery that is located on a supplier’s factory line.
      - slownews45 5y ago
        This is the same idea cash flow wise - front load cash for a supplier so you have capacity / get production. You'd only do title on actual specific equipment if the supplier was a fair bit smaller than you are normally - but the transaction / cash flow story is the same. Upfront cash to help supplier deliver your supply reliably and at scale you need.
    - bllguo 5y ago
      surely funding capex, a reasonably normal thing to do, is a very different thing from outright owning said assets
      - slownews45 5y ago
        functionally it's the same if you look at cash flows - the title to machines matters usually only if the supplier you are funding into is substantially smaller than you are. TSMC is large as well, so they don't need to do the title dance on any specific equipment.
    - ksec 5y ago
      >Are you SURE that they haven't done that with TSMC? Yes. Because those machines are different. TSMC and Foxconn ( or any other contractor ) operate on a very different spectrum.
    - GeekyBear 5y ago
      >Are you SURE that they haven't done that with TSMC? Back around the time Apple was looking at single sourcing chips from TSMC, TSMC's CEO started publicly saying that deals that dedicated a fab to a single customer made sense. >The world's leading foundry chip maker Taiwan Semiconductor Manufacturing Co. Ltd. is considering operating single-customer wafer fabs, according to chairman and CEO Morris Chang. Chang, speaking to analysts on a conference call to discuss the company's second quarter financial results, said that the market is tending to produce fewer higher volume customers and some are so large they need their own dedicated fabs. https://www.eetimes.com/electronics-news/4391104/TSMC-says-single-customer-fabs-make-sense https://www.eetimes.com/electronics-news/4391104/TSMC-says-s...
988747 5y ago
I think smart move for them here would be to buy them now, before they finish building fabs in Arizona - TSMC value will skyrocket after those factories are operational and getting the yields similar to Taiwanese ones.
- bllguo 5y ago
  like the parent said, this is moot. TSMC is not for sale, for reasons of geopolitics and Taiwanese national security. it is Taiwan's biggest bargaining chip
  - rasz 5y ago
    How about Taiwan then? maybe Apple could buy whole nation :)
- akmarinov 5y ago
  Yeah the Arizona factory isn’t going to come anywhere near the Taiwanese one by any metric. It’s just for show to make the american government feel a bit better about the huge national security risk that not having capabilities to manufacture chips is.
  - gwright 5y ago
    > It’s just for show > the huge national security risk Which is it? I'm not up to speed on the details of the factory but on the surface ensuring local fab capabilities seems like a reasonably justified national security concern.
    - bllguo 5y ago
      from a US perspective it is clearly a natsec concern, but Taiwan understands pretty much their whole value as an entity to the US is TSMC. As long as they depend on the US, they have to walk a fine line of giving enough away so that the US continues to protect them, but not so much that the US does not care to defend Taiwan anymore

jbverschoor 5y ago

Doesn’t Apple already own machines? That’s what they usually do. They buy machines and let other companies operate them.

my123 5y ago
Not in the case of TSMC, no.
- slownews45 5y ago
  They've been known to front load order / commit with cash upfront to key suppliers to both lock in supply and basically fund supplier capital purchases. Are you SURE that they haven't done that with TSMC? They can back up their commitments with cash to help suppliers deliver the capacity / volume they need (which is high). This then pays off in terms a more predictable supply chain (ie, they want to launch iphones in fall with generally absolutely cutting edge process nodes).
  - kergonath 5y ago
    AFAIK they put a massive order with TSMC and paid upfront to get all the production of their new line for a while, but I haven't seen anything indicating that Apple owns the machines. At least in this case: they did own the production lines in other cases, such as screens at some point IIRC.
    - slownews45 5y ago
      Which would make sense - the scale of these orders / capital commitments is enormous and this allows Apple to get value for its cash and use that as a competitive advantage against random joe blow companies without nearly the capital resources apple brings.
  - jdminhbg 5y ago
    Apple definitely has pre bought TSMC’s entire new process runs, but the poster above was talking about a different arrangement, where Apple buys and owns actual machinery that is located on a supplier’s factory line.
    - slownews45 5y ago
      This is the same idea cash flow wise - front load cash for a supplier so you have capacity / get production. You'd only do title on actual specific equipment if the supplier was a fair bit smaller than you are normally - but the transaction / cash flow story is the same. Upfront cash to help supplier deliver your supply reliably and at scale you need.
  - bllguo 5y ago
    surely funding capex, a reasonably normal thing to do, is a very different thing from outright owning said assets
    - slownews45 5y ago
      functionally it's the same if you look at cash flows - the title to machines matters usually only if the supplier you are funding into is substantially smaller than you are. TSMC is large as well, so they don't need to do the title dance on any specific equipment.
  - ksec 5y ago
    >Are you SURE that they haven't done that with TSMC? Yes. Because those machines are different. TSMC and Foxconn ( or any other contractor ) operate on a very different spectrum.
  - GeekyBear 5y ago
    >Are you SURE that they haven't done that with TSMC? Back around the time Apple was looking at single sourcing chips from TSMC, TSMC's CEO started publicly saying that deals that dedicated a fab to a single customer made sense. >The world's leading foundry chip maker Taiwan Semiconductor Manufacturing Co. Ltd. is considering operating single-customer wafer fabs, according to chairman and CEO Morris Chang. Chang, speaking to analysts on a conference call to discuss the company's second quarter financial results, said that the market is tending to produce fewer higher volume customers and some are so large they need their own dedicated fabs. https://www.eetimes.com/electronics-news/4391104/TSMC-says-single-customer-fabs-make-sense https://www.eetimes.com/electronics-news/4391104/TSMC-says-s...

988747 5y ago

I think smart move for them here would be to buy them now, before they finish building fabs in Arizona - TSMC value will skyrocket after those factories are operational and getting the yields similar to Taiwanese ones.

bllguo 5y ago
like the parent said, this is moot. TSMC is not for sale, for reasons of geopolitics and Taiwanese national security. it is Taiwan's biggest bargaining chip
- rasz 5y ago
  How about Taiwan then? maybe Apple could buy whole nation :)
akmarinov 5y ago
Yeah the Arizona factory isn’t going to come anywhere near the Taiwanese one by any metric. It’s just for show to make the american government feel a bit better about the huge national security risk that not having capabilities to manufacture chips is.
- gwright 5y ago
  > It’s just for show > the huge national security risk Which is it? I'm not up to speed on the details of the factory but on the surface ensuring local fab capabilities seems like a reasonably justified national security concern.
  - bllguo 5y ago
    from a US perspective it is clearly a natsec concern, but Taiwan understands pretty much their whole value as an entity to the US is TSMC. As long as they depend on the US, they have to walk a fine line of giving enough away so that the US continues to protect them, but not so much that the US does not care to defend Taiwan anymore