2 ms·

Why does TSMC do that? When Apple has better options TSMS will be dumped, as with IBM and Intel before. Why hurt goodwill with other customers?

Octoth0rpe 4y ago
Because Apple showed up with a big bag of money, presumably.
- culturestate 4y ago
  And, importantly, Apple continues to show up with even more big bags of money. Giving Apple de facto right of first refusal for new node capacity is as much about maintaining TSMC's relationship with its most important customer as it is about this year's bottom line.
  - jojobas 4y ago
    I bet they could ask the same amount for 80% of the capacity and Apple would agree.
kijin 4y ago
This is not the first time I've heard of TSMC reserving a very large portion of their production capacity for a single customer, especially in the early days of a new process node. I guess there's an inherent risk in being the launch customer for a new node (unexpected delays, low yield, bugs, etc.) that can only be offset by exceptionally large volume. Maybe there's a gentleman's agreement among Apple, Samsung, AMD and nvidia that somebody's gotta buy those early wafers, but nobody can do that every single time?
- _kbh_ 4y ago
  Another part of the reason is that Apple reportedly bankrolls a large amount of the R&D for new nodes for TSMC
  - EricE 4y ago
    Bingo. TSMC doesn't just give Apple preferential treatment out of the bottom of their heart - Apple pays handsomely for it!
Vvector 4y ago
Launching new processes and building fabs for them is expensive and very risky. Pre-selling the output helps mitigate some of those concerns.
dmitriid 4y ago
Because those customers rarely have anywhere to go. because those customers would dump TSMC the instant there would be a better proposition? Apple is the customer you want to maintain goodwill with. Hell, there were times when Samsung was experiencing issues with sourcing their own chips for their own phones because they sold everything to Apple.
positr0n 4y ago
It's business. They aren't going to lose goodwill for selling their product to the highest bidder unless they are reneging on contracts or something crazy like that.

Octoth0rpe 4y ago

Because Apple showed up with a big bag of money, presumably.

culturestate 4y ago
And, importantly, Apple continues to show up with even more big bags of money. Giving Apple de facto right of first refusal for new node capacity is as much about maintaining TSMC's relationship with its most important customer as it is about this year's bottom line.
- jojobas 4y ago
  I bet they could ask the same amount for 80% of the capacity and Apple would agree.

kijin 4y ago

This is not the first time I've heard of TSMC reserving a very large portion of their production capacity for a single customer, especially in the early days of a new process node. I guess there's an inherent risk in being the launch customer for a new node (unexpected delays, low yield, bugs, etc.) that can only be offset by exceptionally large volume. Maybe there's a gentleman's agreement among Apple, Samsung, AMD and nvidia that somebody's gotta buy those early wafers, but nobody can do that every single time?

_kbh_ 4y ago
Another part of the reason is that Apple reportedly bankrolls a large amount of the R&D for new nodes for TSMC
- EricE 4y ago
  Bingo. TSMC doesn't just give Apple preferential treatment out of the bottom of their heart - Apple pays handsomely for it!

Vvector 4y ago

Launching new processes and building fabs for them is expensive and very risky. Pre-selling the output helps mitigate some of those concerns.

dmitriid 4y ago

Because those customers rarely have anywhere to go. because those customers would dump TSMC the instant there would be a better proposition? Apple is the customer you want to maintain goodwill with. Hell, there were times when Samsung was experiencing issues with sourcing their own chips for their own phones because they sold everything to Apple.

positr0n 4y ago

It's business. They aren't going to lose goodwill for selling their product to the highest bidder unless they are reneging on contracts or something crazy like that.