3 ms·

And yet AAPLs market valuation has taken off while TSMC has been flat at best.

PeterisP 5y ago
They extract quite different margins from their products; the big markup (and thus profit, and thus the justification for market valuation) happens not when a chip is manufactured but when it's put in an iPhone. The iPhone's processor manufactured by TSMC contributes only about $40 to the cost of the phone (https://www.phonearena.com/news/iphone-12-bill-of-materials-revealed_id128600 https://www.phonearena.com/news/iphone-12-bill-of-materials-...). The Macbook's M1 key advantage to Apple seems to be that it's cheaper than the previously used Intel processors (https://www.techspot.com/news/87663-apple-possibly-saving-billions-moving-macs-apple-silicon.html https://www.techspot.com/news/87663-apple-possibly-saving-bi...), so again, it's a major boost to the profitability (and value) of Apple, and just a minor one to TSMC who gets paid a reasonable but effectively commodity price for their manufacturing.
- brodouevencode 5y ago
  Completely good points. Thank you.
- nowherebeen 5y ago
  I wonder if TSMC can raise prices since Apple doesn't have a lot of other options at the 3nm level.
  - ksec 5y ago
    It is hard. But I hope they do. They need to paid their engineers better to compete. Their expansion to US are already costly. ( US engineers working in TSMC are already complaining about working conditions and salaries. I am not surprised. ) Apple doesn't always have to use 3nm, they could have stick with 4nm for another year and let other parties to pay the bill. But what if other parties are not interested at those cost. TSMC will be back to square one. So in reality it kinds of goes both ways.
  - PeterisP 5y ago
    I believe that the prices (and both the availability of capacity and the requirement to use it/pay for it) for Apple were locked in even before TSMC had the current 3nm process, as a certain source of revenue removing much of the business risk of building the fabs.

They extract quite different margins from their products; the big markup (and thus profit, and thus the justification for market valuation) happens not when a chip is manufactured but when it's put in an iPhone. The iPhone's processor manufactured by TSMC contributes only about $40 to the cost of the phone (https://www.phonearena.com/news/iphone-12-bill-of-materials-revealed_id128600 https://www.phonearena.com/news/iphone-12-bill-of-materials-...). The Macbook's M1 key advantage to Apple seems to be that it's cheaper than the previously used Intel processors (https://www.techspot.com/news/87663-apple-possibly-saving-billions-moving-macs-apple-silicon.html https://www.techspot.com/news/87663-apple-possibly-saving-bi...), so again, it's a major boost to the profitability (and value) of Apple, and just a minor one to TSMC who gets paid a reasonable but effectively commodity price for their manufacturing.

brodouevencode 5y ago
Completely good points. Thank you.
nowherebeen 5y ago
I wonder if TSMC can raise prices since Apple doesn't have a lot of other options at the 3nm level.
- ksec 5y ago
  It is hard. But I hope they do. They need to paid their engineers better to compete. Their expansion to US are already costly. ( US engineers working in TSMC are already complaining about working conditions and salaries. I am not surprised. ) Apple doesn't always have to use 3nm, they could have stick with 4nm for another year and let other parties to pay the bill. But what if other parties are not interested at those cost. TSMC will be back to square one. So in reality it kinds of goes both ways.
- PeterisP 5y ago
  I believe that the prices (and both the availability of capacity and the requirement to use it/pay for it) for Apple were locked in even before TSMC had the current 3nm process, as a certain source of revenue removing much of the business risk of building the fabs.