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Why hasn't Apple just bought TSMC?
by warrenm 4y ago
Why hasn't Apple just bought TSMC?
- _kbh_ 4y agoGiven how expensive (and risky) chip fabrication is at the cutting edge doesn't it make more sense to just pay extra to use whoever has the cutting edge node and not take on the R&D risk?.
- John23832 4y agoGeopolitical Risk
- asah 4y agoAnti-trust
- John23832 4y agoWhat would run afoul of antitrust laws? I don’t see it.
- sofixa 4y agoTSMC is a critical supplier of Apple and a bunch of Apple's competitors. Making it Apple-exclusive would kill AMD, Nvidia and most Android phones (Samsung and Huawei are the only exceptions using subpar non-TSMC chips) overnight. There is no way in hell that any antitrust regulator allows Apple to destroy their competitors with an anticompetitive purchase of a supplier.
- asah 4y ago...but meanwhile it's still fine to corner the market on 3nm... (nevermind that modern chips are a hybrid of different feature sizes...)
- John23832 4y agoApple isn't cornering the market. Apple is buying all available supply for actual use. "Cornering the market" typically refers to controlling supply of a product to restrict supply to the larger market and drive up price.
- John23832 4y agoApple buying TSMC doesn't necessarily mean that they are restricting the supply of their competitors. I think you're confused about what anti-trust is or how it works. A TSMC acquisition would only be subject to anti-trust if Apple restricted access to supplies that their competitors currently have access to. Buying/owning the means of supply for your competitors isn't subject to anti-trust. Apple would gladly continue supplying chips with TSMC. Their are fabs created for older features that Apple doesn't use that are core to TSMC's profitability. They're not going to cut that overnight. Especially under a COO-CEO like Cook. The monopolistic practice of acquisition would be to hamstring your competition. In this case, the acquisition would be based on synergy. Samsung, a phone competitor and also screen supplier to Apple, controls the OLED market. They are not subject to anti-trust because they supply a fair market. A more current example would be the Microsoft Activision acquisition. Microsofts defense in that is that they will continue supplying Call Of Duty (and similar high profile games) to competitors.
- dividedbyzero 4y agoTaiwan would never allow that. Also, why would Apple want to?
- badcppdev 4y agoBecause it's not for sale. Even for all the money in Apple's offshore accounts. The Taiwanese government would block the sale if a sale could even be agreed.
- Octoth0rpe 4y agoIt's hard to imagine that they'd be allowed to. Beyond that though, I think Apple's strategy is to create a monopsony for high end parts (ssds, displays, etc). Buying TSMC would work against that.
- etempleton 4y agoWhy would they? With the current arrangement they get all the benefits and none of the risk. If TSMC falters they can go to whoever supplants TSMC and make the same arrangement and continue to have the latest and greatest chips.
- bioemerl 4y ago> Why would they? They could annihilate all competition in the market except for them. Every single Android phone would be forced to use subpar manufacturing from there on out.
- colinmorelli 4y agoThe FTC would likely block the transaction precisely because of this. If they didn't block it, Apple would - upon doing the above - immediately subject themselves to anti-trust litigation from a lot of parties with a lot of money. Really hard to see this working out well for them.
- thefounder 4y agoEU and the US would not accept a merger in the first place.
- jnk345u8dfg9hjk 4y agowhy is the EU involved?
- csunbird 4y agoif Apple wants to sell their products in EU, they have to listen what EU says.
- warrenm 4y agoIt's a Taiwanese company Why do you think the US or EU would get involved?
- 4y ago
- jojobas 4y agoCould it? 500B laying around somewhere? Regulators looking the other way?
- impulser_ 4y agoTSMC is worth over 500b dollars. Apple doesn't have that amount of capital to even make an offer lol.
- joseph_grobbles 4y agoIt's called a stock swap, and Apple could easily accomplish it if from a financial perspective. They could never achieve it with governments and regulators, however. Like 0.00% chance. Even if the government of Taiwan allowed it, there would be a long line of other governments and regulators blocking it.
- hcaz 4y agoApple has 100bn in available cash, they defiantly do have the capital to make an offer if they wanted
- IAmGraydon 4y agoAAPL has $51B on hand, not $100B.
- warrenm 4y agoWhere'd you get that number? Wikipedia seem to put it at a max under $150b[0] ------------- [0] https://en.wikipedia.org/wiki/TSMC https://en.wikipedia.org/wiki/TSMC
- 988747 4y agoThat is severely outdated number, please take a look at market cap from today: https://finance.yahoo.com/quote/TSM https://finance.yahoo.com/quote/TSM it is $454B
- 988747 4y agoThey can pay with: 1. Bank loans 2. Apple stocks Completely doable.
- choikwa 4y agoApple's market cap is 2.333T.
- highwaylights 4y agoI expect it would be more likely they’d just go straight to ASML and start building their own fabs. That said, they may see enough value in their TSMC deal that it’s simply not worth what would be an eye-watering outlay for something that in the end may not really save them all that much. It’s probably not seen as a bad thing internally that other rivals aren’t able to get on 3nm either, which wouldn’t be true if Apple weren’t buying up the supply.
- londons_explore 4y agoI believe there are substantial numbers of patents and/or trade secrets that TSMC hold. Buying ASML alone wouldn't let Apple spin up their own cutting edge IC production, at least not without a decade or more of extra R&D. Having said that, it would give them more negotiating leverage against TSMC, since then they would be a monopoly equipment supplier as well as a customer. Either way, I doubt governments would allow such a purchase. It would be denied on national security grounds and on competition grounds.
- Matsta 4y agoI agree - they would probably go straight to ASML. But not having a fab means they're flexible to jump ship in the future if someone was ever to outpace TSMC. Also, consider Intel's fabs, which were stuck on 14nm for years. This probably factored into one of the reasons Apple made the jump over to Apple Silicon.
- flakeoil 4y ago> I expect it would be more likely they’d just go straight to ASML and start building their own fabs. Yeah, right. As if it is that simple. Just construct a building and put ASML machines inside and off you go.
- achenet 4y agoeasy as spinning up a CRUD app
- highwaylights 4y agoBecause clearly that’s what I just said. > it’s simply not worth what would be an eye-watering outlay Sigh.
- HDThoreaun 4y agoApple doesn't want TSMC. Semi fabrication is a high risk business whose leader can change at any time. They want the freedom to chase that. They can keep those newest chips out of competitors hands by buying out capacity anyway.
- stephen_g 4y agoEven if they wanted to try, the $50bn of cash and short term investments Apple has on hand is about 1/9 of TSMC’s market cap. Even with their $100bn or so of longer term investments they’re still only up to a third of its value.