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I'm interested in the financial aspect of this. Assuming US Fabs are more expensive than in Taiwan that then must mean lower margins or higher prices. I wonder

I'm interested in the financial aspect of this. Assuming US Fabs are more expensive than in Taiwan that then must mean lower margins or higher prices. I wonder if Apple for example has said that they are prepared to pay a premium to ensure diversity of supply?

jason-phillips 4y ago
The iPhone SoC was made by Samsung in Austin for many years, so this has already happened. At the time everyone assumed that Apple wanted to diversify away from Samsung for other reasons which were not necessarily financial.
- klelatti 4y ago
  I bet the Samsung SoC's were a lot cheaper though as less sophisticated. Samsung -> TSMC got them away from a competitor, possibly cheaper (US -> Taiwan) and onto better roadmap. This is quite different and possibly a further sign of Apple spending to diversify supply chains.
  - deleted 4y ago
    [deleted]
  - tooltalk 4y ago
    It was probably a bit cheaper, but Apple was Samsung's anchor customer since mid 2000's. I don't think Apple used Samsung's 10nm or 7nm -- ie, there was no "dual sourcing" or "diversifying" supply chains to speak of. I think Apple's move to TSMC was largley driven by Apple's China/Taiwan first outsourcing practices.
- GeekyBear 4y ago
  > At the time everyone assumed that Apple wanted to diversify away from Samsung for other reasons which were not necessarily financial. When Apple was dual sourcing chips from both Samsung and TSMC, the Samsung version of the A9 had a ~10% reduction in battery life compared to the TSMC version, although the performance was nearly identical otherwise. https://www.tomshardware.com/news/iphone-6s-a9-samsung-vs-tsmc,30306.html https://www.tomshardware.com/news/iphone-6s-a9-samsung-vs-ts...
  - metadat 4y ago
    The article you linked actually reports the Samsung version lasted longer than the TSMC chip (the opposite of what you've stated). Samsung was on a 14nm fab process. TSMC was on a 16nm fab process.
    - GeekyBear 4y ago
      My bad. I should just say that there were the same silicon lottery issues we see when we buy a chip from a single vendor, eg Intel today, compounded by the fact that the process nodes were different too. The popular narrative at the time was that TSMC chips had the better battery life, but it depended on those silicon lottery results. >What we know is that there isn't enough information currently out there to accurately determine whether the TSMC or Samsung A9 SoC has better power consumption, and more importantly just how large any difference might be. 1-on-1 comparisons under controlled conditions can provide us with some insight in to how the TSMC and Samsung A9s compare, but due to the natural variation in chip quality, it's possible to end up testing two atypical phones and never know it. https://www.anandtech.com/show/9708/analyzing-apple-statement-for-tsmc-and-samsung-a9 https://www.anandtech.com/show/9708/analyzing-apple-statemen... However, when the chips fell as they may, Apple single sourced the A10 at TSMC, and they would have had the largest number of performance data points.
  - tooltalk 4y ago
    dual sourcing? I thought TSMC's 16nm was just transitional to wean off Samsung's US operation completely in favor of TSMC in Taiwan. Did Apple "dual-source" at Samsung/TSMC 10nm? or 7nm?
jupp0r 4y ago
Apple doesn't care that much about cost of chips. Their margins are wide enough that even a substantial increase in chip pricing won't significantly impact their profits.
- deleted 4y ago
  [deleted]
- nicoburns 4y ago
  I don't really think this is true. Apple's margins are so wide because they care about the cost of all their components.
- mistrial9 4y ago
  this is profoundly wrong; Apple and other hardware brands have not only practiced material source cost discipline to the extreme, but their internal culture promoting and strengthening that resulted in a nerdy work-a-holic with no life to become CEO of one of the largest companies in the world, specifically because he would, and did, put whole companies out of business with suffocating negotiating tactics over portions of a penny. This is exactly in the pattern of Dell Inc, where the saying about commercial supply partners was "those who do business with Dell, go out of business" source- electronics recycling business in Silicon Valley for a few years
- tooltalk 4y ago
  Apple is known for squeezing their suppliers to last penny.
HDThoreaun 4y ago
My understanding is the that the two biggest financial advantages for building domestic fans are the CHIPS act subsidies and lucrative defense department contracts that are required to be sourced domestically. Not unlikely that there’s a significant political aspect involved here too though.

jason-phillips 4y ago

The iPhone SoC was made by Samsung in Austin for many years, so this has already happened. At the time everyone assumed that Apple wanted to diversify away from Samsung for other reasons which were not necessarily financial.

klelatti 4y ago
I bet the Samsung SoC's were a lot cheaper though as less sophisticated. Samsung -> TSMC got them away from a competitor, possibly cheaper (US -> Taiwan) and onto better roadmap. This is quite different and possibly a further sign of Apple spending to diversify supply chains.
- deleted 4y ago
  [deleted]
- tooltalk 4y ago
  It was probably a bit cheaper, but Apple was Samsung's anchor customer since mid 2000's. I don't think Apple used Samsung's 10nm or 7nm -- ie, there was no "dual sourcing" or "diversifying" supply chains to speak of. I think Apple's move to TSMC was largley driven by Apple's China/Taiwan first outsourcing practices.
GeekyBear 4y ago
> At the time everyone assumed that Apple wanted to diversify away from Samsung for other reasons which were not necessarily financial. When Apple was dual sourcing chips from both Samsung and TSMC, the Samsung version of the A9 had a ~10% reduction in battery life compared to the TSMC version, although the performance was nearly identical otherwise. https://www.tomshardware.com/news/iphone-6s-a9-samsung-vs-tsmc,30306.html https://www.tomshardware.com/news/iphone-6s-a9-samsung-vs-ts...
- metadat 4y ago
  The article you linked actually reports the Samsung version lasted longer than the TSMC chip (the opposite of what you've stated). Samsung was on a 14nm fab process. TSMC was on a 16nm fab process.
  - GeekyBear 4y ago
    My bad. I should just say that there were the same silicon lottery issues we see when we buy a chip from a single vendor, eg Intel today, compounded by the fact that the process nodes were different too. The popular narrative at the time was that TSMC chips had the better battery life, but it depended on those silicon lottery results. >What we know is that there isn't enough information currently out there to accurately determine whether the TSMC or Samsung A9 SoC has better power consumption, and more importantly just how large any difference might be. 1-on-1 comparisons under controlled conditions can provide us with some insight in to how the TSMC and Samsung A9s compare, but due to the natural variation in chip quality, it's possible to end up testing two atypical phones and never know it. https://www.anandtech.com/show/9708/analyzing-apple-statement-for-tsmc-and-samsung-a9 https://www.anandtech.com/show/9708/analyzing-apple-statemen... However, when the chips fell as they may, Apple single sourced the A10 at TSMC, and they would have had the largest number of performance data points.
- tooltalk 4y ago
  dual sourcing? I thought TSMC's 16nm was just transitional to wean off Samsung's US operation completely in favor of TSMC in Taiwan. Did Apple "dual-source" at Samsung/TSMC 10nm? or 7nm?

jupp0r 4y ago

Apple doesn't care that much about cost of chips. Their margins are wide enough that even a substantial increase in chip pricing won't significantly impact their profits.

deleted 4y ago
[deleted]
nicoburns 4y ago
I don't really think this is true. Apple's margins are so wide because they care about the cost of all their components.
mistrial9 4y ago
this is profoundly wrong; Apple and other hardware brands have not only practiced material source cost discipline to the extreme, but their internal culture promoting and strengthening that resulted in a nerdy work-a-holic with no life to become CEO of one of the largest companies in the world, specifically because he would, and did, put whole companies out of business with suffocating negotiating tactics over portions of a penny. This is exactly in the pattern of Dell Inc, where the saying about commercial supply partners was "those who do business with Dell, go out of business" source- electronics recycling business in Silicon Valley for a few years
tooltalk 4y ago
Apple is known for squeezing their suppliers to last penny.

HDThoreaun 4y ago

My understanding is the that the two biggest financial advantages for building domestic fans are the CHIPS act subsidies and lucrative defense department contracts that are required to be sourced domestically. Not unlikely that there’s a significant political aspect involved here too though.