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To me, I think that Apple's reliance on China, and Taiwan, was and is an extremely risky and misguided decision. Imagine if Apple had developed a total reliance

To me, I think that Apple's reliance on China, and Taiwan, was and is an extremely risky and misguided decision. Imagine if Apple had developed a total reliance on chip factories built in, say, Ukraine, back in 2018. That's about where we are now with Taiwan and China, I believe. It's sure been profitable - but at, I would argue, obscene risk. A few years of TSMC being unavailable would have Apple on life support. Apple would actually be worse off than many companies and the ditching Intel decision would do a total 180 into a massive mistake. Nobody cares if you have higher-performance products if you can't make them. Edit: For those saying that can't happen, think Ukraine in 2012 or 2018. Russia? Invading? Can't happen. For Taiwan, China, invading? Can't happen.

rapsey 4y ago
There was no alternative at the time regarding overall production. China gave them the option to be extremely flexible and efficient. Other countries like India/Vietnam is copying the Chinese cookbook. Ony TSMC is capable of producing the most performant chips.
- gjsman-1000 4y ago
  > There was no alternative at the time regarding overall production. China gave them the option to be extremely flexible and efficient. Other countries like India/Vietnam is copying the Chinese cookbook. Yes, and no. Apple has done manufacturing in America before, a long time ago (remember the Apple II?). Also with the $200B in cash they had, they could probably build every factory down to the screw factory they needed. Also worth remembering is that iPhone bodies don't change very much (iPhone SE is like, a decade of a design and still going). $200B would buy at least 5 or more latest-gen chip plants, easily, or at least give TSMC all the capital they needed. If I was Tim Cook, I would have absolutely looked into segmentation. American manufacturing for American customers, Chinese manufacturing for European/Asian customers, Indian manufacturing for Indian customers.
  - rapsey 4y ago
    > Also with the $200B in cash they had When exactly are you talking about? > $200B would buy at least 5 or more latest-gen chip plants, easily, or at least give TSMC all the capital they needed. $200B and a decade. Also do you think Taiwan is just going to let go of their biggest bargaining chip for a measly $200B? > If I was Tim Cook, I would have absolutely looked into segmentation. American manufacturing for American customers, Chinese manufacturing for European/Asian customers, Indian manufacturing for Indian customers. I mean they are doing this as per the article.
    - gjsman-1000 4y ago
      > $200B and a decade. Also do you think Taiwan is just going to let go of their biggest bargaining chip for a measly $200B? Not necessarily a decade. Intel is promising ~4 years for their fabs, and hoping to be online by 2025-ish if I recall correctly. Fab production is also, it seems, going quicker than expected. > When exactly are you talking about? In 2018, Apple's cash pile hit $285 Billion. I was underestimating it. Imagine if they had started building fabs back in 2018 or earlier - they would be coming online, potentially, right now. Which would have been great. > I mean they are doing this as per the article. I'm looking at geopolitics and thinking this could end up being too little too late. https://www.cnbc.com/2018/02/01/apple-earnings-q1-2018-how-much-money-does-apple-have.html https://www.cnbc.com/2018/02/01/apple-earnings-q1-2018-how-m...
      - rapsey 4y ago
        Your point is very strange. Apple did not just suddenly decide in 2018 to manufacture in China. It is what they have been doing for like 10-15 years before that. If you count from iPod on. In mid 2000s it certainly was not an option to manufacture just anywhere and certainly not by them. > Not necessarily a decade. Intel is promising ~4 years for their fabs, and hoping to be online by 2025-ish if I recall correctly. Fab production is also, it seems, going quicker than expected. Ok and how many generations is Intel behind TSMC now and how many will they be in 4 years? You think Apple investors and customers are suddenly going to be OK with a new version of the iphone being worse than its predecessor? To be feasible they can't just catch up, they have to surpass.
hunterb123 4y ago
> For those saying that can't happen, think Ukraine in 2012 or 2018. Russia? Invading? Can't happen. They "invaded" Crimea in 2013, a lot of people expected what's currently happening. edit: 2014 not 2013. Also Crimea overwhelmingly supported being annexed into Russia as they were severely mistreated by Ukraine. There were very clear tensions leading up to both Crimea and Ukraine events. But using the political events of Ukraine/Russia to support tossing Taiwan to the PRC is not something I agree with.
- gjsman-1000 4y ago
  Incorrect. Crimea was invaded in 2014. My point was that in 2012, it was 2 years before the invasion, and less foreseeable despite how quickly in the grand scheme of things it came afterwards.
  - vxNsr 4y ago
    Additionally Ukraine is the breadbasket of the world, people thought Russia wouldn’t do this because of how it would mess up the food supply chain… the exact same argument being made for why China can’t invade Taiwan, too many companies rely on it.
    - dragonwriter 4y ago
      > Additionally Ukraine is the breadbasket of the world, people thought Russia wouldn’t do this because of how it would mess up the food supply chain… No, they thought Russia wouldn’t do it because Ukraine had a Russia aligned government up until just before the invasion.
    - Apocryphon 4y ago
      The Russian armed forces has had a lot of actual battlefield experience invading Georgia in the ‘00s, bombing Syria in the ‘10s, not to mention its internal bloody counterinsurgency occupation in Chechnya in the ‘90s. The Chinese military hasn’t fought a real war since against Vietnam in 1979, and its navy has had no experience at all since- Korea? The end of the civil war? War is entirely more uncertain for China, and potentially more destabilizing with more to lose, than it was for Russia.
e40 4y ago
There are a lot of companies dependent on TSMC, not just Apple.
- gjsman-1000 4y ago
  I don't dispute that - but Apple is still on the line the most of any company if TSMC were to become unavailable (in sales, in products requiring TSMC chips, lost sales, Apple Silicon on all of their devices, so forth). Also Apple had the most capital of any company and thus the least excuse for such dependency. 4 years ago, according to CNBC, they had $285 billion in cash reserves. That could've definitely bought some fabs in America that would be coming online right now. NVIDIA still can make parts in Korea if need be, even if they are a generation behind. AMD could be manufacturing on Intel foundries before we know it. Samsung has Exynos in Korea as well, which is better than nothing.
- deleted 4y ago
  [deleted]
tl 4y ago
That's a nice idea in theory. As much as I'm harsh on Apple for their decisions elsewhere, TSMC is the right choice, right now. Two things that are hard to ignore: 1. Apple held moving the Mac line on Intel for years despite clear indications that it was hurting them. 2. Intel has begun moving to TSMC to fab chips in order to be competitive with AMD who already moved. What alternative move should Apple make? Move to Samsung, where a more expansionist China is still a problem? Start doing their own fabrication in the western hemisphere, a process that could take decades to complete. It is likely that Apple wants to use proposed TSMC or Intel fabs in Arizona, but cannot today.
dragonwriter 4y ago
> For those saying that can't happen, think Ukraine in 2012 or 2018. Russia? Invading? Can't happen? No one paying even a little bit of attention thought “can’t” since the invasion of Georgia in 2008. In 2012 they would have thought “has no reason to at the moment”, much as they would about Belarus today; what was unexpected in 2014 was the Maidan Revolution tossing out the Russia-aligned government, to which the invasion was an immediate response. And in 2018 the likelihood of further invasion was widely discussed, while the scale and precise timing may have been unpredictable in 2018, that further invasion was likely, especially an attempt to seize the Donbas, where Russia has been supporting proxy forces since the 2014 invasion, was not. > For Taiwan, China, invading? Can't happen. That’s... Not at all the general thought.
- TillE 4y ago
  > No one paying even a little bit of attention thought “can’t” Maybe that's true in the abstract, but how did those in power act based on this obvious threat? Europe completely refused to even begin to diversify its natural gas sources until this year, even though that obviously should have happened after the annexation of Crimea at the very latest. They invited catastrophe by relying on Russian energy. In practice, they didn't take the threat seriously. They thought it wouldn't happen, they gambled quite a lot on that outcome.
  - dragonwriter 4y ago
    > Maybe that's true in the abstract, but how did those in power act based on this obvious threat? Again, it wasn’t an obvious threat, not because Russia lacked capacity or will but because it already controlled Ukraine via a puppet government. That changing, and very quickly from the emergence of a significant protest movement, was the unpredicted wildcard. > Europe completely refused to even begin to diversify its natural gas sources until this year, Baltic Pipe, a major component of the diversification effort, was identified as an EC interest in 2013, completed a feasibility study in 2016, had capacity agreements in place in 2018, and went online this September. Infrastructure isn’t something that pops into place when you snap your fingers.
- baryphonic 4y ago
twawaaay 4y ago
That's like super naive. First, you mentioned it. "It has sure been profitable". That's kinda the whole point. You get more profits, you use those profits for R&D to further distance yourself from the competition. If there is any way to reduce your risk it is building a technological edge over competition and sizeable cash reserves. Second, even if Apple faced complete stoppage in production, its situation is different from other companies. It not only can do things that other companies can't (like pull cash to build entire supply chain in some other place), it also has devout user base that will mostly just wait for Apple to come back. People who buy say Samsung laptops and phones will switch to another brand with no second thought if they can't buy Samsung, while people who buy Apple will try as much to wait and will not switch easily. Third, the US is currently the guarantor of Taiwan's safety so maybe the risk isn't as big as you think. Fourth, if TSMC is unavailable they will spin the production somewhere else. And who do you think will get the first chips out of it -- the companies that are the most ready (Apple, they already have all the know how and designs), the companies that are ready to pay the most for the privilege (Apple, because of their cushy margins) and the companies that have the most weight behind them (again Apple). So no, I think that saying Apple's risk is obscene is just naive. Apple has positioned itself to be best at weathering any storm that might happen, it knows the competition will be hit even more and is using this to reap as much benefits as it can while the party lasts.
- smoldesu 4y ago
  > Fourth, if TSMC is unavailable they will spin the production somewhere else. Where? Intel would sell them their fabs, but they don't have a process as advanced as TSMC 5nm. Samsung might be able to compete, but their yields are wickedly low and still slightly behind TSMC. GlobalFoundries might accept Apple as a customer, but then we'd basically have two Qualcomms. What is Apple's plan-b for Taiwan?
  - jjtheblunt 4y ago
    Isn't TSMC building outside Taiwan, to your point? https://www.tomshardware.com/news/tsmc-fab-21-arizona https://www.tomshardware.com/news/tsmc-fab-21-arizona
fakeslimshady5 4y ago
nrclark 4y ago
A few years of TSMC being unavailable would cripple consumer electronics in general. Lots of chip vendors all buy their dies from TSMC. It's not just Apple by a long shot. This is a known problem, potentially one even at the scale of being a national security issue. It's a big part of why there are all these new federal subsidies to try and bring advanced chip-fab back to the US.
paxys 4y ago
Apple went from the brink of bankruptcy to a $3T market cap, all on the back of Chinese/Taiwanese manufacturing. It's pretty safe to say that the move wasn't "misguided".
UltraViolence 4y ago
I don't see China invading Taiwan, since the U.S. has made it abundantly clear that they'll intervene militarily, and the Chinese know they are (as of yet) no match for the U.S. They'll bide their time. Chinese think in terms of centuries, not decades. The hive's important, not the individual worker. I do think they'll need to wait a very long time since if the West decouples they'll be thrown back decades if not more, with no hope of ever catching up. But if a spat were to occur, Apple would definitely be hurt...BIG TIME. In fact, I could even see the company collapse if it were to be cut-off from its supplier base in China and Taiwan.
fomine3 4y ago
So the alternative is Samsung fab located in South Korea. Technically Korean war isn't ended and North Korea actively developing missiles.

rapsey 4y ago

There was no alternative at the time regarding overall production. China gave them the option to be extremely flexible and efficient. Other countries like India/Vietnam is copying the Chinese cookbook. Ony TSMC is capable of producing the most performant chips.

gjsman-1000 4y ago
> There was no alternative at the time regarding overall production. China gave them the option to be extremely flexible and efficient. Other countries like India/Vietnam is copying the Chinese cookbook. Yes, and no. Apple has done manufacturing in America before, a long time ago (remember the Apple II?). Also with the $200B in cash they had, they could probably build every factory down to the screw factory they needed. Also worth remembering is that iPhone bodies don't change very much (iPhone SE is like, a decade of a design and still going). $200B would buy at least 5 or more latest-gen chip plants, easily, or at least give TSMC all the capital they needed. If I was Tim Cook, I would have absolutely looked into segmentation. American manufacturing for American customers, Chinese manufacturing for European/Asian customers, Indian manufacturing for Indian customers.
- rapsey 4y ago
  > Also with the $200B in cash they had When exactly are you talking about? > $200B would buy at least 5 or more latest-gen chip plants, easily, or at least give TSMC all the capital they needed. $200B and a decade. Also do you think Taiwan is just going to let go of their biggest bargaining chip for a measly $200B? > If I was Tim Cook, I would have absolutely looked into segmentation. American manufacturing for American customers, Chinese manufacturing for European/Asian customers, Indian manufacturing for Indian customers. I mean they are doing this as per the article.
  - gjsman-1000 4y ago
    > $200B and a decade. Also do you think Taiwan is just going to let go of their biggest bargaining chip for a measly $200B? Not necessarily a decade. Intel is promising ~4 years for their fabs, and hoping to be online by 2025-ish if I recall correctly. Fab production is also, it seems, going quicker than expected. > When exactly are you talking about? In 2018, Apple's cash pile hit $285 Billion. I was underestimating it. Imagine if they had started building fabs back in 2018 or earlier - they would be coming online, potentially, right now. Which would have been great. > I mean they are doing this as per the article. I'm looking at geopolitics and thinking this could end up being too little too late. https://www.cnbc.com/2018/02/01/apple-earnings-q1-2018-how-much-money-does-apple-have.html https://www.cnbc.com/2018/02/01/apple-earnings-q1-2018-how-m...
    - rapsey 4y ago
      Your point is very strange. Apple did not just suddenly decide in 2018 to manufacture in China. It is what they have been doing for like 10-15 years before that. If you count from iPod on. In mid 2000s it certainly was not an option to manufacture just anywhere and certainly not by them. > Not necessarily a decade. Intel is promising ~4 years for their fabs, and hoping to be online by 2025-ish if I recall correctly. Fab production is also, it seems, going quicker than expected. Ok and how many generations is Intel behind TSMC now and how many will they be in 4 years? You think Apple investors and customers are suddenly going to be OK with a new version of the iphone being worse than its predecessor? To be feasible they can't just catch up, they have to surpass.

hunterb123 4y ago

> For those saying that can't happen, think Ukraine in 2012 or 2018. Russia? Invading? Can't happen. They "invaded" Crimea in 2013, a lot of people expected what's currently happening. edit: 2014 not 2013. Also Crimea overwhelmingly supported being annexed into Russia as they were severely mistreated by Ukraine. There were very clear tensions leading up to both Crimea and Ukraine events. But using the political events of Ukraine/Russia to support tossing Taiwan to the PRC is not something I agree with.

gjsman-1000 4y ago
Incorrect. Crimea was invaded in 2014. My point was that in 2012, it was 2 years before the invasion, and less foreseeable despite how quickly in the grand scheme of things it came afterwards.
- vxNsr 4y ago
  Additionally Ukraine is the breadbasket of the world, people thought Russia wouldn’t do this because of how it would mess up the food supply chain… the exact same argument being made for why China can’t invade Taiwan, too many companies rely on it.
  - dragonwriter 4y ago
    > Additionally Ukraine is the breadbasket of the world, people thought Russia wouldn’t do this because of how it would mess up the food supply chain… No, they thought Russia wouldn’t do it because Ukraine had a Russia aligned government up until just before the invasion.
  - Apocryphon 4y ago
    The Russian armed forces has had a lot of actual battlefield experience invading Georgia in the ‘00s, bombing Syria in the ‘10s, not to mention its internal bloody counterinsurgency occupation in Chechnya in the ‘90s. The Chinese military hasn’t fought a real war since against Vietnam in 1979, and its navy has had no experience at all since- Korea? The end of the civil war? War is entirely more uncertain for China, and potentially more destabilizing with more to lose, than it was for Russia.

e40 4y ago

There are a lot of companies dependent on TSMC, not just Apple.

gjsman-1000 4y ago
I don't dispute that - but Apple is still on the line the most of any company if TSMC were to become unavailable (in sales, in products requiring TSMC chips, lost sales, Apple Silicon on all of their devices, so forth). Also Apple had the most capital of any company and thus the least excuse for such dependency. 4 years ago, according to CNBC, they had $285 billion in cash reserves. That could've definitely bought some fabs in America that would be coming online right now. NVIDIA still can make parts in Korea if need be, even if they are a generation behind. AMD could be manufacturing on Intel foundries before we know it. Samsung has Exynos in Korea as well, which is better than nothing.
deleted 4y ago
[deleted]

tl 4y ago

That's a nice idea in theory. As much as I'm harsh on Apple for their decisions elsewhere, TSMC is the right choice, right now. Two things that are hard to ignore: 1. Apple held moving the Mac line on Intel for years despite clear indications that it was hurting them. 2. Intel has begun moving to TSMC to fab chips in order to be competitive with AMD who already moved. What alternative move should Apple make? Move to Samsung, where a more expansionist China is still a problem? Start doing their own fabrication in the western hemisphere, a process that could take decades to complete. It is likely that Apple wants to use proposed TSMC or Intel fabs in Arizona, but cannot today.

dragonwriter 4y ago

> For those saying that can't happen, think Ukraine in 2012 or 2018. Russia? Invading? Can't happen? No one paying even a little bit of attention thought “can’t” since the invasion of Georgia in 2008. In 2012 they would have thought “has no reason to at the moment”, much as they would about Belarus today; what was unexpected in 2014 was the Maidan Revolution tossing out the Russia-aligned government, to which the invasion was an immediate response. And in 2018 the likelihood of further invasion was widely discussed, while the scale and precise timing may have been unpredictable in 2018, that further invasion was likely, especially an attempt to seize the Donbas, where Russia has been supporting proxy forces since the 2014 invasion, was not. > For Taiwan, China, invading? Can't happen. That’s... Not at all the general thought.

TillE 4y ago
> No one paying even a little bit of attention thought “can’t” Maybe that's true in the abstract, but how did those in power act based on this obvious threat? Europe completely refused to even begin to diversify its natural gas sources until this year, even though that obviously should have happened after the annexation of Crimea at the very latest. They invited catastrophe by relying on Russian energy. In practice, they didn't take the threat seriously. They thought it wouldn't happen, they gambled quite a lot on that outcome.
- dragonwriter 4y ago
  > Maybe that's true in the abstract, but how did those in power act based on this obvious threat? Again, it wasn’t an obvious threat, not because Russia lacked capacity or will but because it already controlled Ukraine via a puppet government. That changing, and very quickly from the emergence of a significant protest movement, was the unpredicted wildcard. > Europe completely refused to even begin to diversify its natural gas sources until this year, Baltic Pipe, a major component of the diversification effort, was identified as an EC interest in 2013, completed a feasibility study in 2016, had capacity agreements in place in 2018, and went online this September. Infrastructure isn’t something that pops into place when you snap your fingers.
baryphonic 4y ago

twawaaay 4y ago

That's like super naive. First, you mentioned it. "It has sure been profitable". That's kinda the whole point. You get more profits, you use those profits for R&D to further distance yourself from the competition. If there is any way to reduce your risk it is building a technological edge over competition and sizeable cash reserves. Second, even if Apple faced complete stoppage in production, its situation is different from other companies. It not only can do things that other companies can't (like pull cash to build entire supply chain in some other place), it also has devout user base that will mostly just wait for Apple to come back. People who buy say Samsung laptops and phones will switch to another brand with no second thought if they can't buy Samsung, while people who buy Apple will try as much to wait and will not switch easily. Third, the US is currently the guarantor of Taiwan's safety so maybe the risk isn't as big as you think. Fourth, if TSMC is unavailable they will spin the production somewhere else. And who do you think will get the first chips out of it -- the companies that are the most ready (Apple, they already have all the know how and designs), the companies that are ready to pay the most for the privilege (Apple, because of their cushy margins) and the companies that have the most weight behind them (again Apple). So no, I think that saying Apple's risk is obscene is just naive. Apple has positioned itself to be best at weathering any storm that might happen, it knows the competition will be hit even more and is using this to reap as much benefits as it can while the party lasts.

smoldesu 4y ago
> Fourth, if TSMC is unavailable they will spin the production somewhere else. Where? Intel would sell them their fabs, but they don't have a process as advanced as TSMC 5nm. Samsung might be able to compete, but their yields are wickedly low and still slightly behind TSMC. GlobalFoundries might accept Apple as a customer, but then we'd basically have two Qualcomms. What is Apple's plan-b for Taiwan?
- jjtheblunt 4y ago
  Isn't TSMC building outside Taiwan, to your point? https://www.tomshardware.com/news/tsmc-fab-21-arizona https://www.tomshardware.com/news/tsmc-fab-21-arizona

fakeslimshady5 4y ago

nrclark 4y ago

A few years of TSMC being unavailable would cripple consumer electronics in general. Lots of chip vendors all buy their dies from TSMC. It's not just Apple by a long shot. This is a known problem, potentially one even at the scale of being a national security issue. It's a big part of why there are all these new federal subsidies to try and bring advanced chip-fab back to the US.

paxys 4y ago

Apple went from the brink of bankruptcy to a $3T market cap, all on the back of Chinese/Taiwanese manufacturing. It's pretty safe to say that the move wasn't "misguided".

UltraViolence 4y ago

I don't see China invading Taiwan, since the U.S. has made it abundantly clear that they'll intervene militarily, and the Chinese know they are (as of yet) no match for the U.S. They'll bide their time. Chinese think in terms of centuries, not decades. The hive's important, not the individual worker. I do think they'll need to wait a very long time since if the West decouples they'll be thrown back decades if not more, with no hope of ever catching up. But if a spat were to occur, Apple would definitely be hurt...BIG TIME. In fact, I could even see the company collapse if it were to be cut-off from its supplier base in China and Taiwan.

fomine3 4y ago

So the alternative is Samsung fab located in South Korea. Technically Korean war isn't ended and North Korea actively developing missiles.