13 ms·

Apple is America's semiconductor problem

175 points by yedava 2y ago

jmclnx 2y ago
The article makes sense to me. Apple has such a large marketing clout, they are able to set the prices. So prices are so low, they can only be made using boarderline slave labor.
- soulofmischief 2y ago
  Are we buying the same devices? Apple hardware is notoriously expensive.
  - csande17 2y ago
    The article suggests Apple is using its buying power to push component prices down, so that it can keep more of the profit on its expensive smartphones for itself.
    - soulofmischief 2y ago
      I appreciate you and the other commenter for correcting me, thank you. That makes much more sense.
  - WheatMillington 2y ago
    Apple can set prices for their vendors/suppliers.
- wil421 2y ago
  Sounds like the tech version of Walmart killing the small town. Except they kill American “tech manufacturing” or whatever you want to call it. It’s 100% about borderline slave labor pay. I used to think it was because chip manufacturing is very nasty but I think it’s both pay and subpar working conditions.
  - bonestamp2 2y ago
    > Except they kill American “tech manufacturing” or whatever you want to call it. This is the part I don't understand... they have placed orders with the new fabs that aren't even built yet. How are they killing American manufacturing if there is no American manufacturing for them to buy from?
    - microtherion 2y ago
      And it's not just isolated factories. There is a whole ecosystem of interrelated manufacturing & assembly companies that you would have to transplant to the US. And I keep hearing that there are hundreds of thousands of people working on iPhone assembly. I can't even imagine how long it would take to replicate such a workforce in the US. Wages aside, this seems to be rather exacting, meticulous work with limited paths of advancement. Where are these laborers going to come from? As Steve Jobs is reported to have told Barack Obama in 2010: "These jobs are not coming back".
    - wil421 2y ago
      It’s political theater. The tide is swaying towards US fabs. What about the past 15+ years? The capability is gone for a lot of it. As Obama put it, “Those jobs aren’t coming back”.
- Jtsummers 2y ago
  Apple is getting 50%+ profit off of their phones. Not sure their other device categories, but it's probably similar especially with their relentless streamlining of the internals. Moving iPad and all their computers to the same chip family (and manufacturing maybe 2 generations at a time with little overlap), for instance, gives them a substantial (potential) savings across all those product lines due to the combined scale.
  - geoffpado 2y ago
    Apple makes 35.3% gross margin on products, per their latest earnings call. Transcript here: https://sixcolors.com/post/2024/08/this-is-tim-q3-2024-analyst-call-transcript/ https://sixcolors.com/post/2024/08/this-is-tim-q3-2024-analy... While they make a gross margin of 46.3% overall, that’s mostly buoyed by the high margin on services, not on the products.
- duxup 2y ago
  > Apple has such a large marketing clout I think their products are genuinely competitive. It's not just marketing.
  - vundercind 2y ago
    I was a Windows and Linux user for nearly two decades before really giving Mac an shot, and still engage regularly with both. My first smartphones were Android. I’ve done tons of development work on both the iOS and Android platforms, and been exposed to a mountain of devices from both. As far as I’m concerned nobody’s even trying to compete with Apple. There are other personal computing products but none of them address the same market as Apple at all. The tiny set of possible competitors for their space all seem to have decided not to even try. [edit] and, to be clear, I’d very much prefer that they had competition in their segment. Even if I stuck with them, it’d at least put competitive pressure on them to improve and/or cut prices.
    - necovek 2y ago
      That's a weird look. What is that market segment nobody is even trying to compete in? Integrated ecosystem is something a number of players have tried and failed at, as they simply don't have the resources to build it up and sustain it until they are competitive. Apple has started small too: tiny little iPods with iTunes + digital content sales really put them back on the map, before they scored a hit with iPhone which was an iPod touch with a modem. They have been riding the iPhone wave since, gobbling up money with iPhone and iPad manufacture and app sales, which allowed them to expand to SoC production for laptops too, which is what got them back on the PC (as in "personal computer") map too.
      - Jtsummers 2y ago
        > iPhone which was an iPod touch with a modem. I mean, that's not totally wrong, but by the release dates completely backwards. The iPod Touch is an iPhone without the modem.
        2y ago
stephenitis 2y ago
Apple is a large beast for sure. With as much expertise as the author has. I didn't read solutions or ways forward. I suppose the main objective is awareness?
- sqeaky 2y ago
  I think a solution is something the government needs to do, I don't believe there is a free market solution to a problem caused specifically by a free market.
- riffraff 2y ago
  It's mentioned towards the end,the author suggests extra taxes on phones made with all chips sourced from abroad.
- bonestamp2 2y ago
  It's a strange article. The title says Apple is the problem with the domestic chip industry and then goes on to state how Apple put in orders from both of the new domestic fabs 1-2 years ago. Then it goes on to state that Apple stole technology when that is not actually a fact -- it's part of an ongoing legal battle that hasn't been proven (innocent until proven guilty in America right? Right?). So, it just comes across as a weird hit-piece with some pretty shaky arguments.
wrsh07 2y ago
If you're talking about America's semiconductor problem and not mentioning Intel even once, your view is horribly horribly slanted
- diggan 2y ago
  Or, the focus is on another company? Just because you talk about Boeing doesn't mean you need to bring up every single competitor to Boeing, no?
  - AnimalMuppet 2y ago
    If you say Apple is America's semiconductor problem, that's a bit stronger than just "the focus is on another company". The focus is on another company to the exclusion of all else, and that exclusion is creating a rather distorted picture of the actual situation.
  - Arn_Thor 2y ago
    Apple was an Intel customer. Talking about Apple’s role in the semiconductor sector MUST include Intel because one must explain how and why Apple decided to develop their own (first mobile, then computer) chips in the first place instead of sticking with Intel. Why is Intel not competitive? THAT question seems much more pertinent to America’s chip travails
    - zamadatix 2y ago
      I don't think chip design conversation, particularly for mobile, really have much to do with the semiconductor production conversation. Sticking with that theme when Apple was doing their own mobile CPUs with ARM Intel's semiconductor fab capabilities were industry leading. I think Intel probably deserves a mention in the article but that line of question feels like the wrong angle of approach for it.
      - hedgehog 2y ago
        Intel was the last company to have domestic leading edge fabs and they used to be one of (the?) highest volume producers by wafer count so they're a pretty big part of any conversation about US semiconductor manufacturing. Another is AMD and their fab spinout as GlobalFoundries, and why GF stopped at 12nm.
sqeaky 2y ago
I find the article compelling. He cited a lot of other articles, isn't making outrageous claims, provided concrete numbers, and isn't spinning unrealistic conspiratorial claims. The only core feature of human behavior we need to accept to believe the article is that some people are very greedy.
- hedgehog 2y ago
  I thought it was weak, his core argument seems to boil down to the idea that if there were more domestic competition then device manufacturers would somehow be willing to buy worse chips for more money. It just doesn't make any sense. The woes of Intel, Micron, etc are nobody's faults but their own.
  - sqeaky 2y ago
    If there were more domestic producers would their chips still be worse?
    - hedgehog 2y ago
      He's arguing for more competition on the customer side (with Apple) but starting more domestic fabs wouldn't directly help unless they have backing with patience and absurdly deep pockets. A big reason we're in this situation is that it's incredibly expensive to stay at the leading edge, and even when you have the money it's hard to do (see: Intel). Intel is only one node behind (N4 at a fab in Ireland), I'm not sure what will be running in their new US fab in Arizona but it will probably be an older process when they get online. Same with TSMC's facility. Maybe that's good enough, there are also very few customers that have the volume to justify spending on the latest process.
- bonestamp2 2y ago
  > He cited a lot of other articles, isn't making outrageous claims One of these citations isn't even about chips, but he kind of implies it is. Not to mention, he said that apple stole technology. That has not been proven, the court case hasn't happened yet. Citing sources out of context, and making untrue claims about what the source says, makes the article less compelling in my opinion.
gvkhna 2y ago
Intel also worked on modems for a long time, ultimately abandoning it and selling it to Apple, who has also not been able to bear fruit with that yet. Modems are hard but Intel with their experience could’ve stuck it out and had a competitive modem chip but instead focused on short term profits which have evaporated now. Note I own shares in both companies.
- bgnn 2y ago
  AFAIK Intel went into modem business with Infineon wireless acquisition at 2015, which was doing fine but dold due to global financial crisis. Intel, as always it does with acquisitions, turned this acquired business into a money pit. They forced all the designs to be ported to Intel fab processes but Intel fabs didn't care about any design business especially a side design (unlike TSMC). Apple leveraged Intel wireless as a bargaining chip against Broadcom and Qualcomm. At the end Apple acqui-hired the people from this unit. I see that Apple is much more serious than Intel to get it done.
brigadier132 2y ago
The kind of monopoly apple has is interesting. In the US Apple has a complete monopoly on customers that spend money. If your app shows ads, apple customers are more valuable. If your app sells any kind of product apple users buy more. Market power is not determined by the number of users but by control of revenue.
- WheatMillington 2y ago
  Nothing you mentioned could be described as a monopoly. Monopoly has a definition, we can't just make it up as we go.
  - deleted 2y ago
    [deleted]
  - xyzzy123 2y ago
    When a supplier has oursized market power that's monopoly. When a buyer has outsized market power it's called a monopsony. I guess that's the concept gp is reaching for.
    - brigadier132 2y ago
      I don't know the right way to describe it but Apple is the gatekeeper to their customers. I think it's accurate to say they sell access to their customers.
    - szundi 2y ago
      No no, it’s when there’s no one else to buy from
      - xyzzy123 2y ago
        I'n saying that from a chip supply perspective Apple is "monopsony-ish" since they control so much of the demand for chips. This is probably true in many areas of their supply chain. The "smell" of a monopsony is the ability to squeeze suppliers to the point of having the power to drive them out of business if they don't meet your terms.
ToucanLoucan 2y ago
> With this position, Apple uses its outsized buying power to squeeze the margins of its suppliers such as Foxconn, leading to poor pay and terrible working conditions in Chinese factories. I'm sorry what? Poor pay and working conditions in the semiconductor hubs of China has been a problem as long as and before Apple made the iPhone. Apple certainly isn't HELPING that situation, but none of them are. All these fabs have made the news at different times for everything from suicide prevention nets to using slave labor to make Apple products, sure, along with every other major tech OEM in the business. I'd be shocked if you could find ANY large manufacturer of these things that hasn't been embroiled in one scandal or another over shitty conditions in their factories. > Even for the American suppliers who have managed to stay in business, things are hard. With Apple accounting for most or all of the revenue of many of its suppliers—by buying most of their output and blocking its competitors from using similar components—suppliers “dare not put a foot wrong” by speaking against Apple, or even mentioning it by name. Then how do you know if they refuse to talk about it? This feels like a piece banking on outrage clicks about Apple. > In 2017, when Apple announced it was moving away from using UK-based Imagination Technologies for graphics processors, the company lost two thirds of its value overnight. Apple’s monopsony power means component suppliers have few buyers. Yeah, Intel lost a bunch on the stock market too when Apple announced they were rolling their own silicon. Losing Apple as a client is absolutely going to suck for any supplier and a stock dip makes perfect sense in that situation. Like, none of this is strictly wrong but it's just describing the highly centralized nature of this industry. None of this is unique to Apple. I'm sure Samsung would have no issues at all swinging suppliers by the tail if they were so inclined to do everything outlined here, and I'm sure they have too. Edit: TIL about the word monopsony.
- bryanlarsen 2y ago
  > None of this is unique to Apple. It's not unique to Apple, but Apple is far better at it and far more focused on it than anybody. It's Tim Cook's particular strength, why he took over after Jobs died and has been a major focus of the company.
- lwkl 2y ago
  Monopsony is the correct term here it means that there is only one buyer. A monopoly means that there is only one seller.
peppertree 2y ago
Apple is a proxy of what people want. The Soviet has already tried top down supply chain management and it did not work.
- blackeyeblitzar 2y ago
  When companies are so big that their value is measured in the trillions I think the line between the two is blurry. These companies are managed top down internally after all, so they’re just a smaller “Soviet” situation.
  - peppertree 2y ago
    The key difference is corporations are managed top down by competent actors that understand the market, and there's consequence to mismanagement.
    - rlili 2y ago
      > and there's consequence to mismanagemen Except if you're a company so large that the government has no choice but to bail you out in a crisis.
    - klausa 2y ago
      What incidents over the past ~2 years, with constant layoffs in the industry, give you the peace of mind that there are in fact, consequences to mismanagement when running big companies?
  - xboxnolifes 2y ago
    The difference appears in failure. 100,000 companies can bankrupt before reaching a single $1 trillion company and that's just markets working as intended. But the government doesn't get that failure mode, at least it's generally not approved of. Apple wasn't, and isn't, the only company trying to be in their position, but they are one of the few trillion dollar companies.
  - refurb 2y ago
    It's not similar at all. The Soviet situation is top down planning based on what "should" be produced. Actual consumer demand isn't important. The Soviet union would decide some years that industrial equipment was the priority, then years later consumer goods. Apple is bottoms-up (through customer and market data), with the leadership approving recommendations from the bottom based on what the consumer wants.
sashank_1509 2y ago
Lol, maybe the author should ask himself if we ban Apple will we then see the American semiconductor industry boom and take over the world? If not, then the logic is strenuous at best, you just viscerally hate Apple and want to find reasons to blame it as opposed to doing anything constructive for the American Semiconductor Industry. Something constructive would involve fixing the work ethic of American Semiconductor Factory employees which seems to be heavily lacking compared to their Taiwanese counterparts, a problem that we don’t see with say the AI workforce or any upper order white collar workforce.
- necovek 2y ago
  You don't "ban Apple", you ban some of the tactics and behaviors they are exhibiting. They mention as positive examples US government banning trade with a Chinese memory chip fab (which was receiving subsidies from government to maintain a 20% lower price) which "forced" Apple to rely on an American fab (that's the implication, even if both Micron and South Korean Samsung are mentioned).
- carlmr 2y ago
  >fixing the work ethic of American Semiconductor Factory employees How do you pinpoint this to be the problem? How are you sure that it's not some narrative used by corporate to excuse outsourcing or putting pressure on wages? I think an industry where technical knowledge was outsourced for cost cutting reasons for decades now is probably having issues because only the managers are left, and they're not productive on their own. Blaming it on the factory worker seems uncalled for.
  - sashank_1509 2y ago
    Anecdotally I have found it faster to order pcbs and get them shipped from China than get them built locally. I’m not just singling out factory workers, they don’t work hard but their managers and multiple higher levels don’t either and I don’t know why. At times I question their motivation to even do business. I also don’t buy that this is a US wide cultural thing, I’ve had excellent on call responses from AWS, heck even my customer experience from Amazon is more prompt than many of the PCB/ Chip vendors, which is why I’m singling out the semi conductor industry, though I’m sure there any many other industries suffering from the same maladies. My anecdotal experience aside, there have been quite a few news articles about TSMC’s struggle in Arizona that highlights the difference in work ethic: https://restofworld.org/2024/tsmc-arizona-expansion/ https://restofworld.org/2024/tsmc-arizona-expansion/
ctoth 2y ago
Was I the only person who saw this article was by Pete Singer and was briefly deeply confused? Why does the OG EA guy care about ... Oh. No R.
duxup 2y ago
I have zero doubt Apple's influence is considerable and maybe monopolistic or something like that in a number of ways. But I find an article that doesn't even address any other companies a little hard to swallow. Are other companies simply not able to "reshore" chip fabs? I have no idea what some of the tidbits thrown in about the apple watch has anything to do with the topic. Let alone some of the heavy handed lines in the article that simply aren't supported as far as I can tell. Some of the lines in this article seem borderline hysterical...
- refulgentis 2y ago
  > Are other companies simply not able to "reshore" chip fabs? Intel has fabs in the US, doesn't seem to me after a couple readings that the article isn't about CPU fabs, its about the semiconductor supply chain. > Some of the tidbits thrown in about the apple watch has anything to do with the topic They seem part and parcel with ex. the App Store mentions, antitrust, and monopoly references. > Let alone some of the heavy handed lines in the article that simply aren't supported as far as I can tell. Such as?
- causal 2y ago
  Yeah I'm a little confused by the premise. How would reshoring chip production be easier if Apple weren't out there buying chips? I get that they are buying up all of the TSMC chips in some segments. Doesn't that just create demand for an alternative? I can't cohere the themes of this article.
  - necovek 2y ago
    The point there seems to be that Apple is pretending to invest and align with moving production to US, but it's really gobbling up the entire foreign production and not at all interested in the "patriotic" narrative, even if they are marketing themselves as such. Basically, it's mostly: Apple is lying with their marketing, here's what proves they really don't care about moving production to US, but only about price and their profit margins.
    - 2y ago
joatmon-snoo 2y ago
Post hoc ergo propter hoc. Sure, Apple offshoring their semiconductor mfg compounded the US' lack of domestic semiconductor mfg capacity/expertise. Apple also did that because it is a _business_, and has not always been the behemoth it is today. They went overseas because it made more sense, not because they had some anti-American goal of crippling US mfg capabilities. The AELP is, ideologically, a anti-big-co institute, which is admirable but is also why this piece engages in post hoc ergo propter hoc rather than discussing meaningful policy proposals: > The American Economic Liberties Project launched in February 2020 to help translate the intellectual victories of the anti-monopoly movement into momentum towards concrete, wide-ranging policy changes that begin to address today’s crisis of concentrated economic power
- blackeyeblitzar 2y ago
  I have to say I’m glad to hear of organizations mobilizing around these problems. Companies above some size reduce fair competition just due to their size, and we need to stop wasting time litigating technicalities with them. Our existing laws and definitions fall really short of recognizing - let alone addressing - the problem (of how competition with them isn’t fair, how it concentrates power, how consumers have little choice). It’s why Microsoft can get away with bundling Teams or abusing Windows users with dark patterns, why Apple can get away with locking down the devices we own with walled gardens and extorting developers with App Store or payment fees, it’s why Google can operate for two decades as a monopoly, and so on. This needs to change, and fast.
- EarlKing 2y ago
  Yeah, it made sense to management looking to increase shareholder value. OTOH, since Apple isn't competing on price, they didn't have to do that. So everything that has ever, or will ever, go wrong with their devices is an entirely self-inflicted wound, and anyone who buys their products gets exactly what they deserve for buying from a company that cares more about profits than the people.
  - dickersnoodle 2y ago
    >a company that cares more about profits than the people. Now you're on the hook for showing us a company that cares more about people than profits... and I mean actually cares where it counts, in budget and headcount and not just in gauzy HR propaganda.
FrankWilhoit 2y ago
Two hundred years ago, it was understood that national borders were things that neither persons, nor goods, nor money, nor information should routinely cross. That understanding was correct and necessary, and must perforce be regained, after who knows what further unnecessary harm has been done.
- Arn_Thor 2y ago
  Citations, lots of them, needed
- szundi 2y ago
  Prepare to consume 1/3 rd of your present rate then
- doug_durham 2y ago
  What an odd and unique view on history. The founding fathers routinely enjoyed imported bananas, and the economy depended on cotton exports.
- warkdarrior 2y ago
  Do you have examples of countries from 200 years ago that had closed borders? In the vast majority of cases, borders were open, for a fee.
- limpbizkitfan 2y ago
  To stupid people, a border is some sacred impenetrable wall. To most of us, it’s just another line.
- kergonath 2y ago
  You would need to provide far more than that. What are you alluding to? 200 years ago was the development of the nation-state as a concept. Borders were completely porous; the technology to close them effectively was more about 100 years in the future. Also, 200 years ago was the development of colonial empires, which is pretty much the opposite of what you say.
mcphage 2y ago
> In 2017, when Apple announced it was moving away from using UK-based Imagination Technologies for graphics processors, the company lost two thirds of its value overnight. I'm not sure what the author is suggesting here. They licensed technology from Imagine Technologies, so therefore they must continue licensing their technology? Also: Imagine Technologies is a chip designer, not a chip fabricator. It's stuck in at the end of a paragraph about Apple's suppliers, but unless I'm mistaken—which I absolutely could be!—Imagine Technologies wasn't one. Also it's a UK company, so I'm not sure how Apple ending their contract with Imagine Technologies hurts the US's semiconductor problem.
- freedomben 2y ago
  > I'm not sure what the author is suggesting here. They licensed technology from Imagine Technologies, so therefore they must continue licensing their technology? I think you're overreading it. I don't think the author is arguing that Apple must stay a customer. Rather they are making a point about how much power Apple has a company. They clearly have the power to make or break other companies. That of course doesn't make the rest of the article correct, but the point about Apple being very powerful does make sense to me.
  - mcphage 2y ago
    > I think you're overreading it. I don't think the author is arguing that Apple must stay a customer. Rather they are making a point about how much power Apple has a company. Maybe, but to me it reads more like "I'm writing a piece complaining about Apple, so I'll bring up every complaint about Apple I can think of, even if they're not really related to the article topic itself".
lifeisstillgood 2y ago
I’m not sure the argument holds water - it seems to be that Apple has huge market power (yes), and manufacturing in Western world basically moved to China (yes), India (yes). But it’s hard to say this is Apples fault. If Apple had not been there, are we saying manufacturing would have stayed onshore - steel foundaries, car factories and chip manufacturers- I mean China and India account for over 3 billion people, who want roads, houses, cars and washing machines. Where else are the factories going to be - the weight of demand means even if US owned the factories they would still be in Guangdong. So yeah, Apple probably misuses its market power, but it’s hard to imagine it did anything but tip the playing field further down the way it was already pointing. So if we tax or punish Apple, do we really think it will all flip back? My personal take is that energy and computing are the things that need to be in shored - no matter the cost differential. Industrialised counties, hopefully, will become energy independent (lots of solar, lots of insulation, lots fewer transport) and computing is going to be similar - focus on that verifiable secure designs
asdasdsddd 2y ago
> Apple buys a far larger share of smartphone and computer semiconductors, given that it accounts for half of global smartphones sales and earns 85% of all smartphones I feel like I'm getting trolled by the author who is citing sales and profits instead of units produced as a metric.
- p1necone 2y ago
  I imagine sales numbers and profits are publicly available information, whereas actual # of units produced is likely not an easy number to find?
  - BenFranklin100 2y ago
    Given Android has 71% of the worldwide market share it’s difficult to make the argument Apple holds a monopoly on the smartphone market [1]. Even in the US, until about 2020, Android had a higher subscriber base, and there is no reason the situation could not reverse and iOS drop below its July 2023 53% subscriber market share [2]. Moreover, give iPhones are significantly more expensive than comparable Android phones, Apple’s ability to claw market share back from Android phones over the last decade is the opposite of how a monopolist might operate by flooding a market with cheap alternatives. It speaks to a consumer perception that iPhones have a larger value. [1] https://gs.statcounter.com/os-market-share/mobile/worldwide https://gs.statcounter.com/os-market-share/mobile/worldwide [2] https://www.statista.com/statistics/266572/market-share-held-by-smartphone-platforms-in-the-united-states/ https://www.statista.com/statistics/266572/market-share-held...
    - BenFranklin100 2y ago
      As a tagalong to my comment, I really wish Android phone makers would get their act together and give Apple better competition. If the trends of the last ten years hold up, iPhones might actually become a monopoly product at some point. ;)
      - wrsh07 2y ago
SuperscalarMeme 2y ago
This is a pretty disappointing article with some very questionable examples. The Imagination Technology example in particular is poor since they were a supplier of intellectual property, not physical goods. So Apple’s usage of them as a supplier had limited bearing on the firm’s other customers or lack thereof. Similarly, the ban of Apple Watches over IP theft has nothing to do with the supply chain issues that the authors attempted to outline. The thesis is also all over the place. The title indicates the problem is semiconductors, but then lots of the arguments have to do with suppliers outside of semiconductors. If Apple’s reliance on TSMC is the big problem, then why isn’t even mentioned that TSMC is the only competitive fab on cutting edge nodes? Lastly, the overarching theme is severely misguided. All of these supply chain dealings are as old as semiconductors themselves. When the industry moved towards targeting consumer electronics in the 70s, semiconductor manufacturing moved out of the US long before Apple was relevant. And if Apple weren’t a powerhouse of consumer electronics today, other companies would be doing the same things. It’s just part of the nature of trying to manufacture and sell mass market electronics.
pcdoodle 2y ago
Fun thing is, most of these semis end up in the trash because apple puts roadblocks on reuse!
malkosta 2y ago
The idea that introducing more regulations will foster the U.S. semiconductor industry doesn’t make sense. History shows that heavy regulation often stifles competition and innovation, leading to stagnation—similar to what happened in Russia’s outdated industries. Instead of imposing more rules that could entrench dominant players, the focus should be on creating an environment that encourages competition and innovation. Overregulation risks making the U.S. chip industry less competitive globally, which would undermine efforts to revitalize it.
- duxup 2y ago
  >the focus should be on creating an environment that encourages competition and innovation. What would that be exactly? Seems like an easy thing to say without specifics, but things like environmental rules and minimum wage laws exist for reasons. If those are obstacles, I'm not sure they're worth discarding.
- downWidOutaFite 2y ago
  Why bring up Russia when we have the Chinese example? History shows that China has captured huge industries by using heavy-handed government regulation
- necovek 2y ago
  > Instead of imposing more rules that could entrench dominant players, the focus should be on creating an environment that encourages competition and innovation. How do you "create an environment" without "imposing more rules"? If you don't really do anything, status quo remains. I guess you could be referring to rules that need to be abolished, so I wonder which ones are really stopping competitors to Apple from springing up that we should do away with?
- CPLX 2y ago
  What are you talking about? History shows that a partially communist country that has extreme regulation has come to dominate huge swaths of global business.
htk 2y ago
Terrible article, as expected from Matt Stoller. "With this position, Apple uses its outsized buying power to squeeze the margins of its suppliers such as Foxconn, leading to poor pay and terrible working conditions in Chinese factories." So Foxconn is either choosing to not do business with Apple's competitors who would pay more (??), or the competitors can't place orders of the magnitude that Apple can and Foxconn workforce would just be smaller with a lot less people being employed. The intellectual dishonesty in the argumentation is so bad that I'm pretty sure I'll skip future Matt Stoller articles.
- necovek 2y ago
  The article is certainly somewhat incoherent. But there's a hint of dishonesty in your retort too: obviously, there are competitors who would pay more (and they are paying more elsewhere, since their margins are so much smaller than Apple's), but for much smaller quantities of production. A supplier like Foxconn can't afford to lose a customer like Apple because they were already selling their services cheap with low margins. Apple is basically squeezing them ever more — instead of growing business needs leading to improved conditions for employees, Foxconn is forced to provide more for less because Apple can demand that "or else". I am not saying this is true, but this line of thinking is still obvious just from the short quote you posted.
hx833001 2y ago
Intel should have produced ARM chips for Apple as a foundry. If they’re to be wildly successful again, they will be doing this anyway. They gave up 18+ years out of x86 pride and bad leadership. I hope Gelsinger can beat TSMC at the process technology game and win Apple’s business.
- kergonath 2y ago
  I think we’d be better served with 3 or 4 companies with close-enough-to-cutting-edge fabs than just Intel. The times when Intel was the undisputed king were not that good in the long run. We need alternatives.
SllX 2y ago
> and more action needs to be taken by the federal government to rein in its control over the global electronics supply chain. Yeah so here it is. The moment you start talking command and control economies you need to GTFO the room.
ankit219 2y ago
A weird article. Apple was not the first or the only company to look to East Asia for cheap manufacturing, elctronic equipments, chips, or cheap labor. The trend was started and accelerated by motor companies and hardware just followed suit. Then, some other points are just...there. Apple is America's semiconductor problem because Apple is so big it purchases things in bulk and gets discounts - like every other big company in every industry. TSMC sold 100% of the capacity to Apple for 3nm chips because no one else had the designs ready, Apple needed them in bulk, and the yield wasn't that high. It is problematic, but you need to mention these things when making a claim. The problem is two fold - other companies are not really innovating and experimenting at semis with a scale at which Apple is. This is a market failure more than an Apple failure. Others were reliant on Qualcomm, broadcomm, samsung, and Intel, with slower pace of innovation. Then there is Asian countries with cheap economies of scale. It's one thing to assume the most nefarious intent from the start and then look at everything from that lens. It mostly leads to paranoia, not insight.
- fundad 2y ago
  A few other things jumped out to me: - Automotive's advanced features require chips but not the most advanced chips (by design, for reliability). - Micron's HQ is in the US but has operated globally since 1998 including design. ("Micron really went global in terms of its operations once it acquired the TI DRAM operations in 1998") - TSMC's 90% share of global semi is why Apple can get the exclusive on advanced processes. - Isn't a lot of CHIPs Act money help prop up Intel who didn't succeed in mobile and is laying off thousands anyway? - Apple did not cause poor pay and working conditions in China, the conditions, pay and environmental protections are how China attracts businesses. - Apple can not tax you because they can not arrest you if you don't pay 30% commission. - Massimo is medical device company, I'm curious how big a semi concern they are.
  - alephnerd 2y ago
    > Automotive's advanced features require chips but not the most advanced chips Exactly, and if Matt Stoller was honest he would bring up that point. Most automotive chips use 28nm, 40nm, and 60nm nodes and China has been very competitive in this space now because of existing capacity built from OSAT and AMTP consolidation in China by Taiwanese and Malaysian/Singaporean players like UMC before the 2019 HK protests, MediaTek, and ASMPT from the 2000s-2010s. It's analog chips, 28nm/40nm nodes and Packaging that have been getting a significant amount of CHIPS funding, as well as similar funding from the Japanese, Taiwanese, South Korean, Malaysian, and Indian governments recently. From a NatSec perspective, it's those kinds of nodes that have a critical impact as most weapons systems can subsist on a Intel i7 and Nvidia Maxwell comparable CPU and GPU. Think EWS, C-RAMs, Guidance Systems, etc. > Isn't a lot of CHIPs Act money help prop up Intel who didn't succeed in mobile and is laying off thousands anyway Those layoffs are staff who don't have experience with High NA EUV processes (aka staff who didn't skill up). I can safely say that. The CHIPS funding is a mix of subsidizing High NA EUV nodes as well as domestic OSAT and AMTP/Packaging capacity.
zombiwoof 2y ago
Tim Cook
aswerty 2y ago
> monopsony > (economics) a market in which goods or services are offered by several sellers but there is only one buyer well that is my new word of the day I guess, not a bad one at that
cryptica 2y ago
In this case, people are the problem for being suggestible and buying Apple obsessively. I've worked for 3 different tech companies which bought and forced me to use an expensive company-supplied MacBook, in spite of the fact that their software project ran in production on Linux which is free. The problem is that people are brainwashed.
- _djo_ 2y ago
  That says more about you than about those making those decisions. Have you ever spent the time to figure out why those tech companies might prefer to issue Macs? To look at their total cost of ownership numbers, at the availability of configuration management and security software, at levels of support, and at overall reliability and machine lifespan? I've been involved in a few exercises to decide what type of machine to use as a standard developer spec device. MacBooks generally turned out to be our best option when taking all requirements into account. Linux-based offerings are getting steadily better, which is a good thing, but levels of support are still a bit of a problem.
  - cryptica 2y ago
    One of the companies I worked for (a non-profit), the product I was working on was 100% open source and 100% running on Linux, but they still forced me to used a company-supplied Apple Macbook instead of letting me use my personal computer which would have cost them nothing. In the 2 other companies, I started work with my personal Linux computer but they forced me to switch to a company-supplied Macbook later. It's not about costs.
    - _djo_ 2y ago
      Every company I've worked for in recent years has blocked people using their personal computers for work, for compliance reasons. Unless you could prove that the personal devices are under the same compliance regime you'd fail any audit. Even non-profits often have to abide by the same compliance requirements, often insisted on by their funders. Issuing a standard computer with a standard managed configuration just removes a ton of headaches for IT.
_djo_ 2y ago
These two articles are much better at explaining why any smartphone or computer manufacturer could never hope to source most of their components from the US. It's not just about semiconductors, but the entire supply chain. https://www.theatlantic.com/business/archive/2012/01/why-the-united-states-will-never-ever-build-the-iphone/251837/ https://www.theatlantic.com/business/archive/2012/01/why-the... https://www.nytimes.com/2019/01/28/technology/iphones-apple-china-made.html https://www.nytimes.com/2019/01/28/technology/iphones-apple-...
WhereIsTheTruth 2y ago
Both Google and Microsoft had plenty of time, resources and reasons to develop their own industry, they didn't, instead held hostage an insane amount of cash Now they pay the price That's what happen when your government consists of clueless warmongers "Oh no, Samsung is developing their own homemade industry, sabotage! quick!"
rickdeckard 2y ago
Seems like I read this article different than many others here... I didn't read it as "Apple is the problem because they are evil", but as "Apple is the problem because they reached a critical scale in this industry". No need to rush to defend Apple for being accused to focus on profit, no need to start 'Whataboutism' how other companies have similar goals. Someone describing how Apple took actions in the interest of maximizing its profit is NOT slander or bashing, it is FINE that they do that. The article talks about Apple’s sheer size as a buyer and how their actions contributed (and partially even caused) the current state of this supply-industry, and how important it is to understand this and evaluate careful steps to counter this trend. It also describes how Apple's narrative of being a "good corporate citizen" for forcing its suppliers to setup small-volume production in US is only half of the story, and WHY that is. And this is important to state as well, because Apple is and will continue to focus on maximizing its own profit, which is NOT making them the enemy, but also not an ally.

175 points by yedava 2y ago

The article makes sense to me. Apple has such a large marketing clout, they are able to set the prices. So prices are so low, they can only be made using boarderline slave labor.

soulofmischief 2y ago
Are we buying the same devices? Apple hardware is notoriously expensive.
- csande17 2y ago
  The article suggests Apple is using its buying power to push component prices down, so that it can keep more of the profit on its expensive smartphones for itself.
  - soulofmischief 2y ago
    I appreciate you and the other commenter for correcting me, thank you. That makes much more sense.
- WheatMillington 2y ago
  Apple can set prices for their vendors/suppliers.
wil421 2y ago
Sounds like the tech version of Walmart killing the small town. Except they kill American “tech manufacturing” or whatever you want to call it. It’s 100% about borderline slave labor pay. I used to think it was because chip manufacturing is very nasty but I think it’s both pay and subpar working conditions.
- bonestamp2 2y ago
  > Except they kill American “tech manufacturing” or whatever you want to call it. This is the part I don't understand... they have placed orders with the new fabs that aren't even built yet. How are they killing American manufacturing if there is no American manufacturing for them to buy from?
  - microtherion 2y ago
    And it's not just isolated factories. There is a whole ecosystem of interrelated manufacturing & assembly companies that you would have to transplant to the US. And I keep hearing that there are hundreds of thousands of people working on iPhone assembly. I can't even imagine how long it would take to replicate such a workforce in the US. Wages aside, this seems to be rather exacting, meticulous work with limited paths of advancement. Where are these laborers going to come from? As Steve Jobs is reported to have told Barack Obama in 2010: "These jobs are not coming back".
  - wil421 2y ago
    It’s political theater. The tide is swaying towards US fabs. What about the past 15+ years? The capability is gone for a lot of it. As Obama put it, “Those jobs aren’t coming back”.
Jtsummers 2y ago
Apple is getting 50%+ profit off of their phones. Not sure their other device categories, but it's probably similar especially with their relentless streamlining of the internals. Moving iPad and all their computers to the same chip family (and manufacturing maybe 2 generations at a time with little overlap), for instance, gives them a substantial (potential) savings across all those product lines due to the combined scale.
- geoffpado 2y ago
  Apple makes 35.3% gross margin on products, per their latest earnings call. Transcript here: https://sixcolors.com/post/2024/08/this-is-tim-q3-2024-analyst-call-transcript/ https://sixcolors.com/post/2024/08/this-is-tim-q3-2024-analy... While they make a gross margin of 46.3% overall, that’s mostly buoyed by the high margin on services, not on the products.
duxup 2y ago
> Apple has such a large marketing clout I think their products are genuinely competitive. It's not just marketing.
- vundercind 2y ago
  I was a Windows and Linux user for nearly two decades before really giving Mac an shot, and still engage regularly with both. My first smartphones were Android. I’ve done tons of development work on both the iOS and Android platforms, and been exposed to a mountain of devices from both. As far as I’m concerned nobody’s even trying to compete with Apple. There are other personal computing products but none of them address the same market as Apple at all. The tiny set of possible competitors for their space all seem to have decided not to even try. [edit] and, to be clear, I’d very much prefer that they had competition in their segment. Even if I stuck with them, it’d at least put competitive pressure on them to improve and/or cut prices.
  - necovek 2y ago
    That's a weird look. What is that market segment nobody is even trying to compete in? Integrated ecosystem is something a number of players have tried and failed at, as they simply don't have the resources to build it up and sustain it until they are competitive. Apple has started small too: tiny little iPods with iTunes + digital content sales really put them back on the map, before they scored a hit with iPhone which was an iPod touch with a modem. They have been riding the iPhone wave since, gobbling up money with iPhone and iPad manufacture and app sales, which allowed them to expand to SoC production for laptops too, which is what got them back on the PC (as in "personal computer") map too.
    - Jtsummers 2y ago
      > iPhone which was an iPod touch with a modem. I mean, that's not totally wrong, but by the release dates completely backwards. The iPod Touch is an iPhone without the modem.
      - 2y ago

stephenitis 2y ago

Apple is a large beast for sure. With as much expertise as the author has. I didn't read solutions or ways forward. I suppose the main objective is awareness?

sqeaky 2y ago
I think a solution is something the government needs to do, I don't believe there is a free market solution to a problem caused specifically by a free market.
riffraff 2y ago
It's mentioned towards the end,the author suggests extra taxes on phones made with all chips sourced from abroad.
bonestamp2 2y ago
It's a strange article. The title says Apple is the problem with the domestic chip industry and then goes on to state how Apple put in orders from both of the new domestic fabs 1-2 years ago. Then it goes on to state that Apple stole technology when that is not actually a fact -- it's part of an ongoing legal battle that hasn't been proven (innocent until proven guilty in America right? Right?). So, it just comes across as a weird hit-piece with some pretty shaky arguments.

wrsh07 2y ago

If you're talking about America's semiconductor problem and not mentioning Intel even once, your view is horribly horribly slanted

diggan 2y ago
Or, the focus is on another company? Just because you talk about Boeing doesn't mean you need to bring up every single competitor to Boeing, no?
- AnimalMuppet 2y ago
  If you say Apple is America's semiconductor problem, that's a bit stronger than just "the focus is on another company". The focus is on another company to the exclusion of all else, and that exclusion is creating a rather distorted picture of the actual situation.
- Arn_Thor 2y ago
  Apple was an Intel customer. Talking about Apple’s role in the semiconductor sector MUST include Intel because one must explain how and why Apple decided to develop their own (first mobile, then computer) chips in the first place instead of sticking with Intel. Why is Intel not competitive? THAT question seems much more pertinent to America’s chip travails
  - zamadatix 2y ago
    I don't think chip design conversation, particularly for mobile, really have much to do with the semiconductor production conversation. Sticking with that theme when Apple was doing their own mobile CPUs with ARM Intel's semiconductor fab capabilities were industry leading. I think Intel probably deserves a mention in the article but that line of question feels like the wrong angle of approach for it.
    - hedgehog 2y ago
      Intel was the last company to have domestic leading edge fabs and they used to be one of (the?) highest volume producers by wafer count so they're a pretty big part of any conversation about US semiconductor manufacturing. Another is AMD and their fab spinout as GlobalFoundries, and why GF stopped at 12nm.

sqeaky 2y ago

I find the article compelling. He cited a lot of other articles, isn't making outrageous claims, provided concrete numbers, and isn't spinning unrealistic conspiratorial claims. The only core feature of human behavior we need to accept to believe the article is that some people are very greedy.

hedgehog 2y ago
I thought it was weak, his core argument seems to boil down to the idea that if there were more domestic competition then device manufacturers would somehow be willing to buy worse chips for more money. It just doesn't make any sense. The woes of Intel, Micron, etc are nobody's faults but their own.
- sqeaky 2y ago
  If there were more domestic producers would their chips still be worse?
  - hedgehog 2y ago
    He's arguing for more competition on the customer side (with Apple) but starting more domestic fabs wouldn't directly help unless they have backing with patience and absurdly deep pockets. A big reason we're in this situation is that it's incredibly expensive to stay at the leading edge, and even when you have the money it's hard to do (see: Intel). Intel is only one node behind (N4 at a fab in Ireland), I'm not sure what will be running in their new US fab in Arizona but it will probably be an older process when they get online. Same with TSMC's facility. Maybe that's good enough, there are also very few customers that have the volume to justify spending on the latest process.
bonestamp2 2y ago
> He cited a lot of other articles, isn't making outrageous claims One of these citations isn't even about chips, but he kind of implies it is. Not to mention, he said that apple stole technology. That has not been proven, the court case hasn't happened yet. Citing sources out of context, and making untrue claims about what the source says, makes the article less compelling in my opinion.

gvkhna 2y ago

Intel also worked on modems for a long time, ultimately abandoning it and selling it to Apple, who has also not been able to bear fruit with that yet. Modems are hard but Intel with their experience could’ve stuck it out and had a competitive modem chip but instead focused on short term profits which have evaporated now. Note I own shares in both companies.

bgnn 2y ago
AFAIK Intel went into modem business with Infineon wireless acquisition at 2015, which was doing fine but dold due to global financial crisis. Intel, as always it does with acquisitions, turned this acquired business into a money pit. They forced all the designs to be ported to Intel fab processes but Intel fabs didn't care about any design business especially a side design (unlike TSMC). Apple leveraged Intel wireless as a bargaining chip against Broadcom and Qualcomm. At the end Apple acqui-hired the people from this unit. I see that Apple is much more serious than Intel to get it done.

brigadier132 2y ago

The kind of monopoly apple has is interesting. In the US Apple has a complete monopoly on customers that spend money. If your app shows ads, apple customers are more valuable. If your app sells any kind of product apple users buy more. Market power is not determined by the number of users but by control of revenue.

WheatMillington 2y ago
Nothing you mentioned could be described as a monopoly. Monopoly has a definition, we can't just make it up as we go.
- deleted 2y ago
  [deleted]
- xyzzy123 2y ago
  When a supplier has oursized market power that's monopoly. When a buyer has outsized market power it's called a monopsony. I guess that's the concept gp is reaching for.
  - brigadier132 2y ago
    I don't know the right way to describe it but Apple is the gatekeeper to their customers. I think it's accurate to say they sell access to their customers.
  - szundi 2y ago
    No no, it’s when there’s no one else to buy from
    - xyzzy123 2y ago
      I'n saying that from a chip supply perspective Apple is "monopsony-ish" since they control so much of the demand for chips. This is probably true in many areas of their supply chain. The "smell" of a monopsony is the ability to squeeze suppliers to the point of having the power to drive them out of business if they don't meet your terms.

ToucanLoucan 2y ago

> With this position, Apple uses its outsized buying power to squeeze the margins of its suppliers such as Foxconn, leading to poor pay and terrible working conditions in Chinese factories. I'm sorry what? Poor pay and working conditions in the semiconductor hubs of China has been a problem as long as and before Apple made the iPhone. Apple certainly isn't HELPING that situation, but none of them are. All these fabs have made the news at different times for everything from suicide prevention nets to using slave labor to make Apple products, sure, along with every other major tech OEM in the business. I'd be shocked if you could find ANY large manufacturer of these things that hasn't been embroiled in one scandal or another over shitty conditions in their factories. > Even for the American suppliers who have managed to stay in business, things are hard. With Apple accounting for most or all of the revenue of many of its suppliers—by buying most of their output and blocking its competitors from using similar components—suppliers “dare not put a foot wrong” by speaking against Apple, or even mentioning it by name. Then how do you know if they refuse to talk about it? This feels like a piece banking on outrage clicks about Apple. > In 2017, when Apple announced it was moving away from using UK-based Imagination Technologies for graphics processors, the company lost two thirds of its value overnight. Apple’s monopsony power means component suppliers have few buyers. Yeah, Intel lost a bunch on the stock market too when Apple announced they were rolling their own silicon. Losing Apple as a client is absolutely going to suck for any supplier and a stock dip makes perfect sense in that situation. Like, none of this is strictly wrong but it's just describing the highly centralized nature of this industry. None of this is unique to Apple. I'm sure Samsung would have no issues at all swinging suppliers by the tail if they were so inclined to do everything outlined here, and I'm sure they have too. Edit: TIL about the word monopsony.

bryanlarsen 2y ago
> None of this is unique to Apple. It's not unique to Apple, but Apple is far better at it and far more focused on it than anybody. It's Tim Cook's particular strength, why he took over after Jobs died and has been a major focus of the company.
lwkl 2y ago
Monopsony is the correct term here it means that there is only one buyer. A monopoly means that there is only one seller.

peppertree 2y ago

Apple is a proxy of what people want. The Soviet has already tried top down supply chain management and it did not work.

blackeyeblitzar 2y ago
When companies are so big that their value is measured in the trillions I think the line between the two is blurry. These companies are managed top down internally after all, so they’re just a smaller “Soviet” situation.
- peppertree 2y ago
  The key difference is corporations are managed top down by competent actors that understand the market, and there's consequence to mismanagement.
  - rlili 2y ago
    > and there's consequence to mismanagemen Except if you're a company so large that the government has no choice but to bail you out in a crisis.
  - klausa 2y ago
    What incidents over the past ~2 years, with constant layoffs in the industry, give you the peace of mind that there are in fact, consequences to mismanagement when running big companies?
- xboxnolifes 2y ago
  The difference appears in failure. 100,000 companies can bankrupt before reaching a single $1 trillion company and that's just markets working as intended. But the government doesn't get that failure mode, at least it's generally not approved of. Apple wasn't, and isn't, the only company trying to be in their position, but they are one of the few trillion dollar companies.
- refurb 2y ago
  It's not similar at all. The Soviet situation is top down planning based on what "should" be produced. Actual consumer demand isn't important. The Soviet union would decide some years that industrial equipment was the priority, then years later consumer goods. Apple is bottoms-up (through customer and market data), with the leadership approving recommendations from the bottom based on what the consumer wants.

sashank_1509 2y ago

Lol, maybe the author should ask himself if we ban Apple will we then see the American semiconductor industry boom and take over the world? If not, then the logic is strenuous at best, you just viscerally hate Apple and want to find reasons to blame it as opposed to doing anything constructive for the American Semiconductor Industry. Something constructive would involve fixing the work ethic of American Semiconductor Factory employees which seems to be heavily lacking compared to their Taiwanese counterparts, a problem that we don’t see with say the AI workforce or any upper order white collar workforce.

necovek 2y ago
You don't "ban Apple", you ban some of the tactics and behaviors they are exhibiting. They mention as positive examples US government banning trade with a Chinese memory chip fab (which was receiving subsidies from government to maintain a 20% lower price) which "forced" Apple to rely on an American fab (that's the implication, even if both Micron and South Korean Samsung are mentioned).
carlmr 2y ago
>fixing the work ethic of American Semiconductor Factory employees How do you pinpoint this to be the problem? How are you sure that it's not some narrative used by corporate to excuse outsourcing or putting pressure on wages? I think an industry where technical knowledge was outsourced for cost cutting reasons for decades now is probably having issues because only the managers are left, and they're not productive on their own. Blaming it on the factory worker seems uncalled for.
- sashank_1509 2y ago
  Anecdotally I have found it faster to order pcbs and get them shipped from China than get them built locally. I’m not just singling out factory workers, they don’t work hard but their managers and multiple higher levels don’t either and I don’t know why. At times I question their motivation to even do business. I also don’t buy that this is a US wide cultural thing, I’ve had excellent on call responses from AWS, heck even my customer experience from Amazon is more prompt than many of the PCB/ Chip vendors, which is why I’m singling out the semi conductor industry, though I’m sure there any many other industries suffering from the same maladies. My anecdotal experience aside, there have been quite a few news articles about TSMC’s struggle in Arizona that highlights the difference in work ethic: https://restofworld.org/2024/tsmc-arizona-expansion/ https://restofworld.org/2024/tsmc-arizona-expansion/

ctoth 2y ago

Was I the only person who saw this article was by Pete Singer and was briefly deeply confused? Why does the OG EA guy care about ... Oh. No R.

duxup 2y ago

I have zero doubt Apple's influence is considerable and maybe monopolistic or something like that in a number of ways. But I find an article that doesn't even address any other companies a little hard to swallow. Are other companies simply not able to "reshore" chip fabs? I have no idea what some of the tidbits thrown in about the apple watch has anything to do with the topic. Let alone some of the heavy handed lines in the article that simply aren't supported as far as I can tell. Some of the lines in this article seem borderline hysterical...

refulgentis 2y ago
> Are other companies simply not able to "reshore" chip fabs? Intel has fabs in the US, doesn't seem to me after a couple readings that the article isn't about CPU fabs, its about the semiconductor supply chain. > Some of the tidbits thrown in about the apple watch has anything to do with the topic They seem part and parcel with ex. the App Store mentions, antitrust, and monopoly references. > Let alone some of the heavy handed lines in the article that simply aren't supported as far as I can tell. Such as?
causal 2y ago
Yeah I'm a little confused by the premise. How would reshoring chip production be easier if Apple weren't out there buying chips? I get that they are buying up all of the TSMC chips in some segments. Doesn't that just create demand for an alternative? I can't cohere the themes of this article.
- necovek 2y ago
  The point there seems to be that Apple is pretending to invest and align with moving production to US, but it's really gobbling up the entire foreign production and not at all interested in the "patriotic" narrative, even if they are marketing themselves as such. Basically, it's mostly: Apple is lying with their marketing, here's what proves they really don't care about moving production to US, but only about price and their profit margins.
  - 2y ago

joatmon-snoo 2y ago

Post hoc ergo propter hoc. Sure, Apple offshoring their semiconductor mfg compounded the US' lack of domestic semiconductor mfg capacity/expertise. Apple also did that because it is a _business_, and has not always been the behemoth it is today. They went overseas because it made more sense, not because they had some anti-American goal of crippling US mfg capabilities. The AELP is, ideologically, a anti-big-co institute, which is admirable but is also why this piece engages in post hoc ergo propter hoc rather than discussing meaningful policy proposals: > The American Economic Liberties Project launched in February 2020 to help translate the intellectual victories of the anti-monopoly movement into momentum towards concrete, wide-ranging policy changes that begin to address today’s crisis of concentrated economic power

blackeyeblitzar 2y ago
I have to say I’m glad to hear of organizations mobilizing around these problems. Companies above some size reduce fair competition just due to their size, and we need to stop wasting time litigating technicalities with them. Our existing laws and definitions fall really short of recognizing - let alone addressing - the problem (of how competition with them isn’t fair, how it concentrates power, how consumers have little choice). It’s why Microsoft can get away with bundling Teams or abusing Windows users with dark patterns, why Apple can get away with locking down the devices we own with walled gardens and extorting developers with App Store or payment fees, it’s why Google can operate for two decades as a monopoly, and so on. This needs to change, and fast.
EarlKing 2y ago
Yeah, it made sense to management looking to increase shareholder value. OTOH, since Apple isn't competing on price, they didn't have to do that. So everything that has ever, or will ever, go wrong with their devices is an entirely self-inflicted wound, and anyone who buys their products gets exactly what they deserve for buying from a company that cares more about profits than the people.
- dickersnoodle 2y ago
  >a company that cares more about profits than the people. Now you're on the hook for showing us a company that cares more about people than profits... and I mean actually cares where it counts, in budget and headcount and not just in gauzy HR propaganda.

FrankWilhoit 2y ago

Two hundred years ago, it was understood that national borders were things that neither persons, nor goods, nor money, nor information should routinely cross. That understanding was correct and necessary, and must perforce be regained, after who knows what further unnecessary harm has been done.

Arn_Thor 2y ago
Citations, lots of them, needed
szundi 2y ago
Prepare to consume 1/3 rd of your present rate then
doug_durham 2y ago
What an odd and unique view on history. The founding fathers routinely enjoyed imported bananas, and the economy depended on cotton exports.
warkdarrior 2y ago
Do you have examples of countries from 200 years ago that had closed borders? In the vast majority of cases, borders were open, for a fee.
limpbizkitfan 2y ago
To stupid people, a border is some sacred impenetrable wall. To most of us, it’s just another line.
kergonath 2y ago
You would need to provide far more than that. What are you alluding to? 200 years ago was the development of the nation-state as a concept. Borders were completely porous; the technology to close them effectively was more about 100 years in the future. Also, 200 years ago was the development of colonial empires, which is pretty much the opposite of what you say.

mcphage 2y ago

> In 2017, when Apple announced it was moving away from using UK-based Imagination Technologies for graphics processors, the company lost two thirds of its value overnight. I'm not sure what the author is suggesting here. They licensed technology from Imagine Technologies, so therefore they must continue licensing their technology? Also: Imagine Technologies is a chip designer, not a chip fabricator. It's stuck in at the end of a paragraph about Apple's suppliers, but unless I'm mistaken—which I absolutely could be!—Imagine Technologies wasn't one. Also it's a UK company, so I'm not sure how Apple ending their contract with Imagine Technologies hurts the US's semiconductor problem.

freedomben 2y ago
> I'm not sure what the author is suggesting here. They licensed technology from Imagine Technologies, so therefore they must continue licensing their technology? I think you're overreading it. I don't think the author is arguing that Apple must stay a customer. Rather they are making a point about how much power Apple has a company. They clearly have the power to make or break other companies. That of course doesn't make the rest of the article correct, but the point about Apple being very powerful does make sense to me.
- mcphage 2y ago
  > I think you're overreading it. I don't think the author is arguing that Apple must stay a customer. Rather they are making a point about how much power Apple has a company. Maybe, but to me it reads more like "I'm writing a piece complaining about Apple, so I'll bring up every complaint about Apple I can think of, even if they're not really related to the article topic itself".

lifeisstillgood 2y ago

I’m not sure the argument holds water - it seems to be that Apple has huge market power (yes), and manufacturing in Western world basically moved to China (yes), India (yes). But it’s hard to say this is Apples fault. If Apple had not been there, are we saying manufacturing would have stayed onshore - steel foundaries, car factories and chip manufacturers- I mean China and India account for over 3 billion people, who want roads, houses, cars and washing machines. Where else are the factories going to be - the weight of demand means even if US owned the factories they would still be in Guangdong. So yeah, Apple probably misuses its market power, but it’s hard to imagine it did anything but tip the playing field further down the way it was already pointing. So if we tax or punish Apple, do we really think it will all flip back? My personal take is that energy and computing are the things that need to be in shored - no matter the cost differential. Industrialised counties, hopefully, will become energy independent (lots of solar, lots of insulation, lots fewer transport) and computing is going to be similar - focus on that verifiable secure designs

asdasdsddd 2y ago

> Apple buys a far larger share of smartphone and computer semiconductors, given that it accounts for half of global smartphones sales and earns 85% of all smartphones I feel like I'm getting trolled by the author who is citing sales and profits instead of units produced as a metric.

p1necone 2y ago
I imagine sales numbers and profits are publicly available information, whereas actual # of units produced is likely not an easy number to find?
- BenFranklin100 2y ago
  Given Android has 71% of the worldwide market share it’s difficult to make the argument Apple holds a monopoly on the smartphone market [1]. Even in the US, until about 2020, Android had a higher subscriber base, and there is no reason the situation could not reverse and iOS drop below its July 2023 53% subscriber market share [2]. Moreover, give iPhones are significantly more expensive than comparable Android phones, Apple’s ability to claw market share back from Android phones over the last decade is the opposite of how a monopolist might operate by flooding a market with cheap alternatives. It speaks to a consumer perception that iPhones have a larger value. [1] https://gs.statcounter.com/os-market-share/mobile/worldwide https://gs.statcounter.com/os-market-share/mobile/worldwide [2] https://www.statista.com/statistics/266572/market-share-held-by-smartphone-platforms-in-the-united-states/ https://www.statista.com/statistics/266572/market-share-held...
  - BenFranklin100 2y ago
    As a tagalong to my comment, I really wish Android phone makers would get their act together and give Apple better competition. If the trends of the last ten years hold up, iPhones might actually become a monopoly product at some point. ;)
    - wrsh07 2y ago

SuperscalarMeme 2y ago

This is a pretty disappointing article with some very questionable examples. The Imagination Technology example in particular is poor since they were a supplier of intellectual property, not physical goods. So Apple’s usage of them as a supplier had limited bearing on the firm’s other customers or lack thereof. Similarly, the ban of Apple Watches over IP theft has nothing to do with the supply chain issues that the authors attempted to outline. The thesis is also all over the place. The title indicates the problem is semiconductors, but then lots of the arguments have to do with suppliers outside of semiconductors. If Apple’s reliance on TSMC is the big problem, then why isn’t even mentioned that TSMC is the only competitive fab on cutting edge nodes? Lastly, the overarching theme is severely misguided. All of these supply chain dealings are as old as semiconductors themselves. When the industry moved towards targeting consumer electronics in the 70s, semiconductor manufacturing moved out of the US long before Apple was relevant. And if Apple weren’t a powerhouse of consumer electronics today, other companies would be doing the same things. It’s just part of the nature of trying to manufacture and sell mass market electronics.

pcdoodle 2y ago

Fun thing is, most of these semis end up in the trash because apple puts roadblocks on reuse!

malkosta 2y ago

The idea that introducing more regulations will foster the U.S. semiconductor industry doesn’t make sense. History shows that heavy regulation often stifles competition and innovation, leading to stagnation—similar to what happened in Russia’s outdated industries. Instead of imposing more rules that could entrench dominant players, the focus should be on creating an environment that encourages competition and innovation. Overregulation risks making the U.S. chip industry less competitive globally, which would undermine efforts to revitalize it.

duxup 2y ago
>the focus should be on creating an environment that encourages competition and innovation. What would that be exactly? Seems like an easy thing to say without specifics, but things like environmental rules and minimum wage laws exist for reasons. If those are obstacles, I'm not sure they're worth discarding.
downWidOutaFite 2y ago
Why bring up Russia when we have the Chinese example? History shows that China has captured huge industries by using heavy-handed government regulation
necovek 2y ago
> Instead of imposing more rules that could entrench dominant players, the focus should be on creating an environment that encourages competition and innovation. How do you "create an environment" without "imposing more rules"? If you don't really do anything, status quo remains. I guess you could be referring to rules that need to be abolished, so I wonder which ones are really stopping competitors to Apple from springing up that we should do away with?
CPLX 2y ago
What are you talking about? History shows that a partially communist country that has extreme regulation has come to dominate huge swaths of global business.

htk 2y ago

Terrible article, as expected from Matt Stoller. "With this position, Apple uses its outsized buying power to squeeze the margins of its suppliers such as Foxconn, leading to poor pay and terrible working conditions in Chinese factories." So Foxconn is either choosing to not do business with Apple's competitors who would pay more (??), or the competitors can't place orders of the magnitude that Apple can and Foxconn workforce would just be smaller with a lot less people being employed. The intellectual dishonesty in the argumentation is so bad that I'm pretty sure I'll skip future Matt Stoller articles.

necovek 2y ago
The article is certainly somewhat incoherent. But there's a hint of dishonesty in your retort too: obviously, there are competitors who would pay more (and they are paying more elsewhere, since their margins are so much smaller than Apple's), but for much smaller quantities of production. A supplier like Foxconn can't afford to lose a customer like Apple because they were already selling their services cheap with low margins. Apple is basically squeezing them ever more — instead of growing business needs leading to improved conditions for employees, Foxconn is forced to provide more for less because Apple can demand that "or else". I am not saying this is true, but this line of thinking is still obvious just from the short quote you posted.

hx833001 2y ago

Intel should have produced ARM chips for Apple as a foundry. If they’re to be wildly successful again, they will be doing this anyway. They gave up 18+ years out of x86 pride and bad leadership. I hope Gelsinger can beat TSMC at the process technology game and win Apple’s business.

kergonath 2y ago
I think we’d be better served with 3 or 4 companies with close-enough-to-cutting-edge fabs than just Intel. The times when Intel was the undisputed king were not that good in the long run. We need alternatives.

SllX 2y ago

> and more action needs to be taken by the federal government to rein in its control over the global electronics supply chain. Yeah so here it is. The moment you start talking command and control economies you need to GTFO the room.

ankit219 2y ago

A weird article. Apple was not the first or the only company to look to East Asia for cheap manufacturing, elctronic equipments, chips, or cheap labor. The trend was started and accelerated by motor companies and hardware just followed suit. Then, some other points are just...there. Apple is America's semiconductor problem because Apple is so big it purchases things in bulk and gets discounts - like every other big company in every industry. TSMC sold 100% of the capacity to Apple for 3nm chips because no one else had the designs ready, Apple needed them in bulk, and the yield wasn't that high. It is problematic, but you need to mention these things when making a claim. The problem is two fold - other companies are not really innovating and experimenting at semis with a scale at which Apple is. This is a market failure more than an Apple failure. Others were reliant on Qualcomm, broadcomm, samsung, and Intel, with slower pace of innovation. Then there is Asian countries with cheap economies of scale. It's one thing to assume the most nefarious intent from the start and then look at everything from that lens. It mostly leads to paranoia, not insight.

fundad 2y ago
A few other things jumped out to me: - Automotive's advanced features require chips but not the most advanced chips (by design, for reliability). - Micron's HQ is in the US but has operated globally since 1998 including design. ("Micron really went global in terms of its operations once it acquired the TI DRAM operations in 1998") - TSMC's 90% share of global semi is why Apple can get the exclusive on advanced processes. - Isn't a lot of CHIPs Act money help prop up Intel who didn't succeed in mobile and is laying off thousands anyway? - Apple did not cause poor pay and working conditions in China, the conditions, pay and environmental protections are how China attracts businesses. - Apple can not tax you because they can not arrest you if you don't pay 30% commission. - Massimo is medical device company, I'm curious how big a semi concern they are.
- alephnerd 2y ago
  > Automotive's advanced features require chips but not the most advanced chips Exactly, and if Matt Stoller was honest he would bring up that point. Most automotive chips use 28nm, 40nm, and 60nm nodes and China has been very competitive in this space now because of existing capacity built from OSAT and AMTP consolidation in China by Taiwanese and Malaysian/Singaporean players like UMC before the 2019 HK protests, MediaTek, and ASMPT from the 2000s-2010s. It's analog chips, 28nm/40nm nodes and Packaging that have been getting a significant amount of CHIPS funding, as well as similar funding from the Japanese, Taiwanese, South Korean, Malaysian, and Indian governments recently. From a NatSec perspective, it's those kinds of nodes that have a critical impact as most weapons systems can subsist on a Intel i7 and Nvidia Maxwell comparable CPU and GPU. Think EWS, C-RAMs, Guidance Systems, etc. > Isn't a lot of CHIPs Act money help prop up Intel who didn't succeed in mobile and is laying off thousands anyway Those layoffs are staff who don't have experience with High NA EUV processes (aka staff who didn't skill up). I can safely say that. The CHIPS funding is a mix of subsidizing High NA EUV nodes as well as domestic OSAT and AMTP/Packaging capacity.

zombiwoof 2y ago

Tim Cook

aswerty 2y ago

> monopsony > (economics) a market in which goods or services are offered by several sellers but there is only one buyer well that is my new word of the day I guess, not a bad one at that

cryptica 2y ago

In this case, people are the problem for being suggestible and buying Apple obsessively. I've worked for 3 different tech companies which bought and forced me to use an expensive company-supplied MacBook, in spite of the fact that their software project ran in production on Linux which is free. The problem is that people are brainwashed.

_djo_ 2y ago
That says more about you than about those making those decisions. Have you ever spent the time to figure out why those tech companies might prefer to issue Macs? To look at their total cost of ownership numbers, at the availability of configuration management and security software, at levels of support, and at overall reliability and machine lifespan? I've been involved in a few exercises to decide what type of machine to use as a standard developer spec device. MacBooks generally turned out to be our best option when taking all requirements into account. Linux-based offerings are getting steadily better, which is a good thing, but levels of support are still a bit of a problem.
- cryptica 2y ago
  One of the companies I worked for (a non-profit), the product I was working on was 100% open source and 100% running on Linux, but they still forced me to used a company-supplied Apple Macbook instead of letting me use my personal computer which would have cost them nothing. In the 2 other companies, I started work with my personal Linux computer but they forced me to switch to a company-supplied Macbook later. It's not about costs.
  - _djo_ 2y ago
    Every company I've worked for in recent years has blocked people using their personal computers for work, for compliance reasons. Unless you could prove that the personal devices are under the same compliance regime you'd fail any audit. Even non-profits often have to abide by the same compliance requirements, often insisted on by their funders. Issuing a standard computer with a standard managed configuration just removes a ton of headaches for IT.

_djo_ 2y ago

These two articles are much better at explaining why any smartphone or computer manufacturer could never hope to source most of their components from the US. It's not just about semiconductors, but the entire supply chain. https://www.theatlantic.com/business/archive/2012/01/why-the-united-states-will-never-ever-build-the-iphone/251837/ https://www.theatlantic.com/business/archive/2012/01/why-the... https://www.nytimes.com/2019/01/28/technology/iphones-apple-china-made.html https://www.nytimes.com/2019/01/28/technology/iphones-apple-...

WhereIsTheTruth 2y ago

Both Google and Microsoft had plenty of time, resources and reasons to develop their own industry, they didn't, instead held hostage an insane amount of cash Now they pay the price That's what happen when your government consists of clueless warmongers "Oh no, Samsung is developing their own homemade industry, sabotage! quick!"

rickdeckard 2y ago

Seems like I read this article different than many others here... I didn't read it as "Apple is the problem because they are evil", but as "Apple is the problem because they reached a critical scale in this industry". No need to rush to defend Apple for being accused to focus on profit, no need to start 'Whataboutism' how other companies have similar goals. Someone describing how Apple took actions in the interest of maximizing its profit is NOT slander or bashing, it is FINE that they do that. The article talks about Apple’s sheer size as a buyer and how their actions contributed (and partially even caused) the current state of this supply-industry, and how important it is to understand this and evaluate careful steps to counter this trend. It also describes how Apple's narrative of being a "good corporate citizen" for forcing its suppliers to setup small-volume production in US is only half of the story, and WHY that is. And this is important to state as well, because Apple is and will continue to focus on maximizing its own profit, which is NOT making them the enemy, but also not an ally.