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Apple is not known for overpaying. Apple is however a significant volume customer and volume customers usually enjoy a huge discount that smaller customers do

Apple is not known for overpaying. Apple is however a significant volume customer and volume customers usually enjoy a huge discount that smaller customers don't get. So in addition to preferential allotment, Apple is probably paying less for the same node.

danudey 5y ago
Apple may not overpay, but if they're willing to pre-pay multiple billions of dollars that's a huge incentive for a company like TSMC, who gain the ability to instantly (well, "instantly") launch capital projects, rather than having to wait for three years of revenue to roll in first. For all we know, TSMC is taking all that 3nm Apple money and putting it into producing new 3nm fab lines, which would honestly be better for everyone in the long term (except Intel, I suppose).
- tooltalk 5y ago
  Sure, Apple's prepay financial arrangement might have some outsized influence in smaller, riskier, or declining businesses, such as GTAT or JDI, but there is nothing special about pre-pay, especially in this market and this particular industry. Top fabless makers from Qualcomm, to nVidia, to AMD, to TSMC are flushed with money and are desperately competing for capacity. In fact, TSMC recently disclosed that they received over $3.8B in such prepay, or "temporary receipt" from various customers for their future nodes [1]. Further, Samsung and TSMC routinely spend many more billions on capex every year. Both companies not only have many billions stashed away, but also have the means to finance them without relying on Apple. For instance, Samsung's capex in 2020 was nearly $30B; TSMC ~$25B, vs Apple's $7B. Sure, Apple is a big consumer of the latest nodes, but the process nodes will advance with or without Apple or Apple's money. [1] https://www.tomshardware.com/news/tsmc-collects-huge-prepayments https://www.tomshardware.com/news/tsmc-collects-huge-prepaym...

danudey 5y ago

Apple may not overpay, but if they're willing to pre-pay multiple billions of dollars that's a huge incentive for a company like TSMC, who gain the ability to instantly (well, "instantly") launch capital projects, rather than having to wait for three years of revenue to roll in first. For all we know, TSMC is taking all that 3nm Apple money and putting it into producing new 3nm fab lines, which would honestly be better for everyone in the long term (except Intel, I suppose).

tooltalk 5y ago
Sure, Apple's prepay financial arrangement might have some outsized influence in smaller, riskier, or declining businesses, such as GTAT or JDI, but there is nothing special about pre-pay, especially in this market and this particular industry. Top fabless makers from Qualcomm, to nVidia, to AMD, to TSMC are flushed with money and are desperately competing for capacity. In fact, TSMC recently disclosed that they received over $3.8B in such prepay, or "temporary receipt" from various customers for their future nodes [1]. Further, Samsung and TSMC routinely spend many more billions on capex every year. Both companies not only have many billions stashed away, but also have the means to finance them without relying on Apple. For instance, Samsung's capex in 2020 was nearly $30B; TSMC ~$25B, vs Apple's $7B. Sure, Apple is a big consumer of the latest nodes, but the process nodes will advance with or without Apple or Apple's money. [1] https://www.tomshardware.com/news/tsmc-collects-huge-prepayments https://www.tomshardware.com/news/tsmc-collects-huge-prepaym...