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> Gross margin for the quarter was 60.4% this is what happens when you can convince your top customer to pay you 2.4x to gain that <20% performance boost. htt

> Gross margin for the quarter was 60.4% this is what happens when you can convince your top customer to pay you 2.4x to gain that <20% performance boost. https://forums.appleinsider.com/discussion/229139/a16-bionic-reportedly-costs-more-than-twice-as-much-as-a15 https://forums.appleinsider.com/discussion/229139/a16-bionic...

spywaregorilla 4y ago
FWIW that statement isn't very meaningful without more context. 20% performance boost could easily be worth many multiples of 2.4x the cost. They only directly compare (240% vs. 20%) if their initial values are the same.
- dis-sys 4y ago
  > 20% performance boost could easily be worth many multiples of 2.4x the cost. clearly not the case for iphone 14. people are not buying new iphone just because it is 20% faster than iphone 13.
  - jakuboboza 4y ago
    for iphone it doesnt matter I would still got for discounted 13 rather than 14 as you gain mainly GPU core which changes not much. But for things like Macbooks smaller process means a lost, less energy used means less heat and less issues with throttling etc. This is big for MAcs but less so for ipads and iphones.
  - spywaregorilla 4y ago
    Maybe, but again, that's not enough information to make your statement a complete line of thought The iphone 14 does not cost 2.4x more because one component is 2.4x more expensive. What is it now? Idk. A lot has changed since the iphone 13 besides the chip, but it looks like the launch price is $200 more for the 128GB model for the 14 vs. the 13 (~25%). What's the total sales look like? What would the estimated total sales be without it? Not really interested in going further into this.
throwawaylinux 4y ago
Yep, that's what a process technology advantage is worth. Intel's margins were consistently mid/low 60s when their fabs made the best silicon.
jakuboboza 4y ago
i mean the wafers for N4 are smaller so the yields are smaller and in the end it costs more. Also Apple doesnt do small chips or chiplets so some silicon they make is really big. Big die = smaller yields.
- addaon 4y ago
  I believe all of TSMC's modern processes use 300 mm wafers. Is this incorrect?
deleted 4y ago
[deleted]
ethbr0 4y ago
That's a partial accounting. The customer can sustainably afford to pay in proportion to the value it delivers to them, not TSMC. Apple has a finely tuned machine for turning performance into profits, and so can afford to pay more than others... and still have it make sense for Apple. If TSMC instead had a collection of automotive OEMs as their top-tier customers, this math wouldn't work. The point being... be in a business where your profit margins are a rounding error in comparison to your customers' bill of materials, and you won't ever go hungry.
- dis-sys 4y ago
  Apple's gross margin is significantly lower than that of TSMC. everything else is just cheap talk.
  - lotsofpulp 4y ago
    A combination of profit margin, profit, and volatility are relevant. Apple’s lower profit margin is offset by the consistency of its profit margin and sheer size of the profit. https://www.macrotrends.net/stocks/charts/AAPL/apple/net-profit-margin https://www.macrotrends.net/stocks/charts/AAPL/apple/net-pro... https://www.macrotrends.net/stocks/charts/TSM/taiwan-semiconductor-manufacturing/net-profit-margin https://www.macrotrends.net/stocks/charts/TSM/taiwan-semicon...
  - ethbr0 4y ago
    If Apple pays TSMC $40 for an M1, and sells a MBA for $1000, Apple's gross margin can be much smaller and still easily support a larger TSMC margin.
ksec 4y ago
I cant believe this is posted on HN. A link to Appleinsider, about TSMC charging 2.4x more for N4 compare to N5P. And the whole point of this Topic on HN was about TSMC Q3, which, should Apple really did paid 2.4x more for their roughly 70M of iPhone Pro A16, would have show up on TSMC quarterly results or future guidance. So NO. N4 does not cost 2.4x of N5.
beambot 4y ago
Let's not forget about global chip shortages and limited production capacities. Apple is paying to be front in the queue as much as they are for the chips themselves -- as a shortage-induced revenue decline would be vastly more impactful on their market cap than paying extra on the BOM for key components
LatteLazy 4y ago
Usain Bolt is barely twice as fast as me, but he get's paid a lot more than double what I do to run. No one said prices had to be linearly proportional to performance...

spywaregorilla 4y ago

FWIW that statement isn't very meaningful without more context. 20% performance boost could easily be worth many multiples of 2.4x the cost. They only directly compare (240% vs. 20%) if their initial values are the same.

dis-sys 4y ago
> 20% performance boost could easily be worth many multiples of 2.4x the cost. clearly not the case for iphone 14. people are not buying new iphone just because it is 20% faster than iphone 13.
- jakuboboza 4y ago
  for iphone it doesnt matter I would still got for discounted 13 rather than 14 as you gain mainly GPU core which changes not much. But for things like Macbooks smaller process means a lost, less energy used means less heat and less issues with throttling etc. This is big for MAcs but less so for ipads and iphones.
- spywaregorilla 4y ago
  Maybe, but again, that's not enough information to make your statement a complete line of thought The iphone 14 does not cost 2.4x more because one component is 2.4x more expensive. What is it now? Idk. A lot has changed since the iphone 13 besides the chip, but it looks like the launch price is $200 more for the 128GB model for the 14 vs. the 13 (~25%). What's the total sales look like? What would the estimated total sales be without it? Not really interested in going further into this.

throwawaylinux 4y ago

Yep, that's what a process technology advantage is worth. Intel's margins were consistently mid/low 60s when their fabs made the best silicon.

jakuboboza 4y ago

i mean the wafers for N4 are smaller so the yields are smaller and in the end it costs more. Also Apple doesnt do small chips or chiplets so some silicon they make is really big. Big die = smaller yields.

addaon 4y ago
I believe all of TSMC's modern processes use 300 mm wafers. Is this incorrect?

deleted 4y ago

[deleted]

ethbr0 4y ago

That's a partial accounting. The customer can sustainably afford to pay in proportion to the value it delivers to them, not TSMC. Apple has a finely tuned machine for turning performance into profits, and so can afford to pay more than others... and still have it make sense for Apple. If TSMC instead had a collection of automotive OEMs as their top-tier customers, this math wouldn't work. The point being... be in a business where your profit margins are a rounding error in comparison to your customers' bill of materials, and you won't ever go hungry.

dis-sys 4y ago
Apple's gross margin is significantly lower than that of TSMC. everything else is just cheap talk.
- lotsofpulp 4y ago
  A combination of profit margin, profit, and volatility are relevant. Apple’s lower profit margin is offset by the consistency of its profit margin and sheer size of the profit. https://www.macrotrends.net/stocks/charts/AAPL/apple/net-profit-margin https://www.macrotrends.net/stocks/charts/AAPL/apple/net-pro... https://www.macrotrends.net/stocks/charts/TSM/taiwan-semiconductor-manufacturing/net-profit-margin https://www.macrotrends.net/stocks/charts/TSM/taiwan-semicon...
- ethbr0 4y ago
  If Apple pays TSMC $40 for an M1, and sells a MBA for $1000, Apple's gross margin can be much smaller and still easily support a larger TSMC margin.

ksec 4y ago

I cant believe this is posted on HN. A link to Appleinsider, about TSMC charging 2.4x more for N4 compare to N5P. And the whole point of this Topic on HN was about TSMC Q3, which, should Apple really did paid 2.4x more for their roughly 70M of iPhone Pro A16, would have show up on TSMC quarterly results or future guidance. So NO. N4 does not cost 2.4x of N5.

beambot 4y ago

Let's not forget about global chip shortages and limited production capacities. Apple is paying to be front in the queue as much as they are for the chips themselves -- as a shortage-induced revenue decline would be vastly more impactful on their market cap than paying extra on the BOM for key components

LatteLazy 4y ago

Usain Bolt is barely twice as fast as me, but he get's paid a lot more than double what I do to run. No one said prices had to be linearly proportional to performance...