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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 yo

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...

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...