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I'd love to be a fly on the wall during these negotiations. Just to see what the heck they even talk about, what information each party comes armed with, and wh
by atonse 4y ago
I'd love to be a fly on the wall during these negotiations. Just to see what the heck they even talk about, what information each party comes armed with, and what kinds of concessions get offered.
I mean it isn't just a "we'll lower this" I bet there's lots of juicy confidential future roadmap stuff, things like "Ok we'll help you invest in this _____ tech and machinery but you have to knock off half a cent" or who knows what!
- epberry 4y agoYeah absolutely. Another huge thing I got some window into at Qualcomm is technical validation. So Apple is going to be looking for proof that the chips deliver and TSMC is going to be pushing back against high expectations on that front.
- foobiekr 4y agoQualcomm is absolutely brutal as a vendor. They pursue % of revenue deals instead of selling chips at $Y. They can only get away with it for lte/5g because Broadcom and others totally dropped the ball.
- epberry 4y agoYep they are extremely aggressive. The technology is also extremely hard though.
- cft 4y agoSince they are basically the only manufacturer, when Apple "rejects" the price hike, what options does Apple have?
- duxup 4y agoSame options as TSMC, continue negotiating. They both want this to get worked out.
- JacobThreeThree 4y agoIt seems like one of the options is to leak some of the negotiation details to the media.
- duxup 4y agoPlenty of leaks out there that aren't a part of some strategy, sometimes it is just a leak.
- _kbh_ 4y agoConsidering Apple funds a lot of TSMC's R&D I dare say they have a lot of leverage if they really wanna push it.
- colejohnson66 4y agoBut Apple needs TSMC. Not saying you’re wrong, but TSMC also has leverage. TSMC doesn’t want to price Apple out, but at the same time, Apple can’t just pack up and go to a competitor. At the nodes they’re working at, going to a competitor could require a complete relayout with new design rules.
- nyokodo 4y ago> Apple can’t just pack up and go to a competitor No, but they can use their massive war chest and expertise to ramp up a competitor or become one themselves over the next decade or two. With massive corporate ships like TSMC and Apple it takes a long time to change course but they work on longer timelines so a big negative shift over a long time scale is an alarming signal.
- ChrisMarshallNY 4y agoIf anyone can do it, it's Apple. Remember when there was no way that Apple would ever be able to move away from Moto? Remember when there was no way that Apple would ever be able to move away from IBM/Power? Remember when there was no way that Apple would ever be able to move away from Intel?
- GeekyBear 4y agoRemember when there was no way Apple would shift their SOC production away from Samsung?
- ChuckNorris89 4y agoBuilding your own semiconductor fab with good yelds that are profitable is monumentally more complex than all of those things combined. Why do you think only Intel and Samsung are the ones left at the cutting edge anf even they are struggling to keep up with TSMC? If you think Apple can just buy their way into fab success, you don't understand the complexities of semiconductor manufacturing.
- FartyMcFarter 4y agoClearly there's a level that Apple wouldn't pay (e.g. 100000000% hike), so there are definitely options up to and including cancelling plans to buy such chips from TSMC.
- Hamuko 4y agoAsk what kind of tax breaks the US government would be willing to give them if they were to build a foundry in the US.
- AngryData 4y agoNothing immediately, but they have the cash on hand to fund competitors now that could replace them in say 10 years or so.
- sangnoir 4y agoHow is this approach working out for China? Not snark, I genuinely want to know what resident experts think of the progress made by throwing vast sums at SoTA node fabs.
- duxup 4y agoYeah the scale of complexity in these deals must be way way beyond the sticker price.
- jejeyyy77 4y agoProbably a lot less interesting than it seems because it's not like Tim Cook comes into a board room to negotiate. Most likely middle managers/directors emailing each other.
- ethbr0 4y ago> Most likely middle managers/directors emailing each other. Pretty much like sovereign nations negotiating treaties. Which is an apt metaphor, because neither Apple nor TSMC has the ability to force the other to do anything. So, negotiations become a crawl to find a mutually-acceptable local optimum. Which ends up with both getting things they see as strategic priorities, while compromising on things they care about less. Most of the dance is around figuring out what the other's strategic priorities actually are, and which concerns are secondary. Or they have mutually-exclusove strategic priorities, in which case there is no deal.
- yellow_lead 4y ago"strategic priorities" or "Something that can make me look good" to an executive
- londons_explore 4y agoHaving worked at a company that got an Apple deal... It usually isn't a level bargaining table... And it isn't unusual for no profit to be made whatsoever on the Apple deal, because merely the rumour that Apple has signed a deal with your company has so many other benefits. TSMC is in a stronger position than most suppliers, because they have really strong demand for their product and don't need the prestige that an Apple deal offers.
- ras3022 4y agoExactly. And they pretty much have to make a deal because if they don’t it’s mutually assured destruction. There’s so seller like TSMC and no buyer like Apple.
- discordance 4y agoThere was a post on HN a few days ago showing the negotation emails between Jobs and NewsCorp/James Murdoch: https://news.ycombinator.com/item?id=5752212 https://news.ycombinator.com/item?id=5752212
- concinds 4y agoAn even better equivalent would be the Apple-Microsoft negotiations in 1997, around Microsoft Office, IE-as-default, non voting shares, etc. I think TechEmails published a bunch of these.
- FartyMcFarter 4y agoA darker example would be the emails between tech CEOs during the salary fixing scandal: https://www.vanityfair.com/news/business/2014/04/apple-google-settle-wage-fixing-hiring-case/amp https://www.vanityfair.com/news/business/2014/04/apple-googl...
- WastingMyTime89 4y agoMurdoch e-mails are nice in that they nicely highlight the multiple fronts nature of negotiating where you can often find compromise by shifting how you approach the problem. The way Jobs closes it is quite unusual however because in this case NewsCorp were late movers. Apple had already reached terms with all their competitors and could put on the table a take it or leave it offer which Murdoch couldn’t refuse. I was part of the team in charge on negotiating the termination of an on-going contract involving a potential settlement in the low teens millions of dollars between two huge industrial companies once. Obviously it’s nothing as big as a deal between Apple and TSMC but still not an insignificant sum. I was surprised by how straightforward the whole thing went. Basically we had prepared our arguments: we knew the minimum payment we could justify, the maximum we thought the contract allowed them to ask, what we were aiming for and how much we estimated going to court would cost us and them. They had done the same. There were a couple of back and forth where one party made an offer, the other countered with another one explaining why what was asked didn’t apply and why it should rather be like so and so. At some point, we said that’s our last offer we won’t move anymore. They decided to agree and that was it.
- dylan604 4y agoApple: we'll pay no more for this item than ____ TSMC: you'll pay _____ or you can go to the other fab, oh right, you'll pay _____ -------- vendorSellingToBigBox: we would like _____ per unit of our product bigBoxBuyer: that's nice. we'll pay 40%______ per unit. you'll sell extremelyLargeNumberOfUnits, and make it up in volume. oh, if you don't sell a minimum number, you have to buy all of the unsold items back from us. you'll also get the worst shelf space available compared to your competitors. i'm sorry you thought this was a negotiation.
- bombcar 4y agoYou can actually deduce the vendors that have influence on the big box buyers if you look carefully enough. And some of the vendors will tell Walmart/Costco to take an airborne intercourse course against rolling pastries. Others will sell a white-label or generic brand to them. After all, it's just business.
- sbaiddn 4y ago"take an airborne intercourse course against rolling pastries" Ill have to steal that one
- nebula8804 4y ago>You can actually deduce the vendors that have influence on the big box buyers if you look carefully enough. How? I'm coming up blank. Is there a way to compare prices or quantity against other big box stores?
- bombcar 4y agoLook for large big box stores that conspicuously have a product line absent, or only have a very defined subset of the product available. For awhile iPhones were just completely missing from some larger stores, but it seems Apple has the upper hand there now and they're back in business. And even now Apple holds a very right reign on the prices charged (Best Buy seems to have the most leverage here, as they often sell new MacBooks for a bit lower than the Apple Store). This is one of the reasons Apple started the stores; gives them leverage against the retail giants. There are a number of brands you'll never see at Costco; they don't play the game.
- sva_ 4y agoI have doubts that a fly posseses sufficient neuronal capacity to parse human language. Furthermore I'm also unsure if the hearing system of a fly would be sophisticated enough to capture the nuances of spoken language.
- wheelie_boy 4y agoOne thing I'm wondering about is which side leaked this news item, and what their goal was
- bhk 4y agoI'd bet this is part of the negotiation, going by the way the article hammers on the risk to TSMC.
- vineyardmike 4y agoOr it’s a way for apple to justify price hikes next season - to defer the blame.
- eternalban 4y agoApple: We have 200 billion dollars in cash. That's close to CCP's defense budget for '21. Taiwan:? Apple: We also have the technology. Taiwan: ?? Apple: Did we ever tell you about our iSoldier project? ["parody. not to be taken seriously"]
- ras3022 4y agoThat's funny but $200B seemed way too small. Then I found this: https://www.pgpf.org/chart-archive/0053_defense-comparison https://www.pgpf.org/chart-archive/0053_defense-comparison "The United States spends more on national defense than China, India, Russia, United Kingdom, Saudi Arabia, Germany, France, Japan, and South Korea — combined." !? And $200B is inside the consensus estimate of $200B to $300B. Wow.
- eternalban 4y agoNot to forget, Apple also controls the app store and billions of devoted fans with iPhone with push notifications /g. Seriously I am wondering when will we see a corporation go to war in a kind of futuristic Opium War sort of battle.
- choko 4y agoI'm not a fan of comparisons like that because they don't account for cost or standard of living between counties, just raw exchange rates. It would be especially pronounced when including countries like India and Russia.
- philistine 4y agoYou're right, but when the numbers are so lopsided on the US' favour, there's no way in hell that cost of living can account for such a stark difference. I mean, the US has 20 aircraft carriers and the rest of the world has 28. The proof is in the pudding.
- dan1234 4y agoThe proof is actually in the eating, not the pudding.