4 ms·

But 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

But 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 ago
  If 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 ago
    Remember when there was no way Apple would shift their SOC production away from Samsung?
  - ChuckNorris89 4y ago
    Building 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.
    - foobiekr 4y ago
      What apple really brings to the table isn’t really plain cash though capital investment helps it’s guaranteed capacity.
    - ChrisMarshallNY 4y ago
      > you don't understand the complexities of semiconductor manufacturing. Eh. Might know a thing or two, but I'm sure you know what you're talking about.
      - ChuckNorris89 4y ago
        Please enlighten us.
        ChrisMarshallNY 4y ago
        Nah, that's OK. Have a great day!
    - nyokodo 4y ago
      > If you think Apple can just buy their way into fab success No one is saying they can "just" buy their way into fab success. However, I think they do have the cash and clout to make it happen on a decade long timeline, possibly in league with Intel/Samsung or the US Government, or all three, etc. Obviously that would be enormously costly and risky, but any move to eventually do so is a threat to TSMC, so even if they don't do it they have a negotiating position with TSMC right now because the relationship is enormously valuable.
- hollerith 4y ago
  >over the next decade or two Sure, but how are they going to produce iPads and iPhones before then? They can't have more than a year's worth of CPUs stockpiled.
  - nyokodo 4y ago
    > Sure, but how are they going to produce iPads and iPhones before then? They can't have more than a year's worth of CPUs stockpiled. From TSMC chips. Basically if TSMC insists on raising prices to levels above what Apple is prepared to pay they can threaten to move away from TSMC eventually. If TSMC refuses to budge then Apple will have to pay the higher prices in the short to medium term and then expend capital to not be beholden to TSMC over the long term. So then the question is does TSMC value the relationship over the long term or do they value the higher prices in the short to medium term? That could be Apple's negotiating position.
KptMarchewa 4y ago
Intel was at the same position as TSMC now - there was no competing supplier. Apple decided to become one themselves.
- philjohn 4y ago
  Depends on the reality of the deal TSMC has with ASML - those machines aren't exactly quick to ramp up production of.
- hollerith 4y ago
  I don't understand this comment: even if there were times in past years when AMD CPUs were significantly less performant and more energy-hungry than Intel CPUs, Macs with AMD CPUs that would have sold at least well enough to keep the Mac alive as a product line.
_kbh_ 4y ago
Apple 100% does need TSMC at this point and there is leverage both ways. I suspect if Apple really wanted to they would probably start to produce their products in two lines like Nvidia did, with cheaper phones produced on something like Samsungs 4nm and the higher end phones on TSMCS 3nm. This has the added benefit of diversifying their supply chain (to a degree), giving TSMC less leverage over Apple and potentially reducing the production cost of the lower end phones.
- Crosseye_Jack 4y ago
  > I suspect if Apple really wanted to they would probably start to produce their products in two lines like Nvidia did, with cheaper phones produced on something like Samsungs 4nm and the higher end phones on TSMCS 3nm. Wouldn't be the first time Apple has used multiple vendors for their SOC. The 6s for example had SOCs made by both Samsung (14nm) and TMSC (16nm).
chasil 4y ago
AMD was quite angry that they were shut out of TSMC's 3nm. I wonder how they would react if they were offered 25% of Apple's 3nm capacity at the higher price. This could be a good lesson for everybody.
Sohcahtoa82 4y ago
TSMC needs Apple, but Apple needs TSMC. Sounds like they're playing a game of chicken.
giantrobot 4y ago
Apple can't easily go to a competitor. They have the cash on hand to play kingmaker though. They could go to one of TSMC's competitors and make them into the new TSMC. TSMC's current position is largely due to Apple fronting huge sums of cash for them to develop new nodes. They get guaranteed sales at a generous price for the first few million chips off the line. There's few other players, if any, that could offer TSMC a deal like that. Apple could with some pain replace TSMC but TSMC can't really replace Apple. While Apple is a demanding partner they pay their bills on time and can and do front R&D money. Once Apple's deliveries are made TSMC now has a money printer on the new process node Apple paid for.
- fomine3 4y ago
  This is good point, compared to unrealistic Apple's own fab idea.

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 ago
If 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 ago
  Remember when there was no way Apple would shift their SOC production away from Samsung?
- ChuckNorris89 4y ago
  Building 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.
  - foobiekr 4y ago
    What apple really brings to the table isn’t really plain cash though capital investment helps it’s guaranteed capacity.
  - ChrisMarshallNY 4y ago
    > you don't understand the complexities of semiconductor manufacturing. Eh. Might know a thing or two, but I'm sure you know what you're talking about.
    - ChuckNorris89 4y ago
      Please enlighten us.
      - ChrisMarshallNY 4y ago
        Nah, that's OK. Have a great day!
  - nyokodo 4y ago
    > If you think Apple can just buy their way into fab success No one is saying they can "just" buy their way into fab success. However, I think they do have the cash and clout to make it happen on a decade long timeline, possibly in league with Intel/Samsung or the US Government, or all three, etc. Obviously that would be enormously costly and risky, but any move to eventually do so is a threat to TSMC, so even if they don't do it they have a negotiating position with TSMC right now because the relationship is enormously valuable.
hollerith 4y ago
>over the next decade or two Sure, but how are they going to produce iPads and iPhones before then? They can't have more than a year's worth of CPUs stockpiled.
- nyokodo 4y ago
  > Sure, but how are they going to produce iPads and iPhones before then? They can't have more than a year's worth of CPUs stockpiled. From TSMC chips. Basically if TSMC insists on raising prices to levels above what Apple is prepared to pay they can threaten to move away from TSMC eventually. If TSMC refuses to budge then Apple will have to pay the higher prices in the short to medium term and then expend capital to not be beholden to TSMC over the long term. So then the question is does TSMC value the relationship over the long term or do they value the higher prices in the short to medium term? That could be Apple's negotiating position.

KptMarchewa 4y ago

Intel was at the same position as TSMC now - there was no competing supplier. Apple decided to become one themselves.

philjohn 4y ago
Depends on the reality of the deal TSMC has with ASML - those machines aren't exactly quick to ramp up production of.
hollerith 4y ago
I don't understand this comment: even if there were times in past years when AMD CPUs were significantly less performant and more energy-hungry than Intel CPUs, Macs with AMD CPUs that would have sold at least well enough to keep the Mac alive as a product line.

_kbh_ 4y ago

Apple 100% does need TSMC at this point and there is leverage both ways. I suspect if Apple really wanted to they would probably start to produce their products in two lines like Nvidia did, with cheaper phones produced on something like Samsungs 4nm and the higher end phones on TSMCS 3nm. This has the added benefit of diversifying their supply chain (to a degree), giving TSMC less leverage over Apple and potentially reducing the production cost of the lower end phones.

Crosseye_Jack 4y ago
> I suspect if Apple really wanted to they would probably start to produce their products in two lines like Nvidia did, with cheaper phones produced on something like Samsungs 4nm and the higher end phones on TSMCS 3nm. Wouldn't be the first time Apple has used multiple vendors for their SOC. The 6s for example had SOCs made by both Samsung (14nm) and TMSC (16nm).

chasil 4y ago

AMD was quite angry that they were shut out of TSMC's 3nm. I wonder how they would react if they were offered 25% of Apple's 3nm capacity at the higher price. This could be a good lesson for everybody.

Sohcahtoa82 4y ago

TSMC needs Apple, but Apple needs TSMC. Sounds like they're playing a game of chicken.

giantrobot 4y ago

Apple can't easily go to a competitor. They have the cash on hand to play kingmaker though. They could go to one of TSMC's competitors and make them into the new TSMC. TSMC's current position is largely due to Apple fronting huge sums of cash for them to develop new nodes. They get guaranteed sales at a generous price for the first few million chips off the line. There's few other players, if any, that could offer TSMC a deal like that. Apple could with some pain replace TSMC but TSMC can't really replace Apple. While Apple is a demanding partner they pay their bills on time and can and do front R&D money. Once Apple's deliveries are made TSMC now has a money printer on the new process node Apple paid for.

fomine3 4y ago
This is good point, compared to unrealistic Apple's own fab idea.