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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

by 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.
- causal 2y ago
  That much seems easy to believe, I just find it hard to connect that to an obstacle for domestic chip production
- rbanffy 2y ago
  Tim Cook has an obligation towards the shareholders and takes it seriously. As an Apple shareholder who doesn’t live in the US, moving to US chip suppliers would not help with his obligations towards me. I do like the US - don’t get me wrong - but Apple is in the business of making devices, not making investments the government should be at least facilitating.
  - e44858 2y ago
    That's why we need tariffs, to make Apple suffer financially if they refuse to move production back to the US.
    - rbanffy 2y ago
      As a shareholder, I wouldn't be impressed. As a supporter of a more just and equal planet, I'd be in. Be mindful that such tariffs wouldn't hit Apple alone.
      - necovek 2y ago
        "For a company with a market valuation of over 2T dollars at the time of import, import tariffs ..." :)
Barrin92 2y ago
>How would reshoring chip production be easier if Apple weren't out there buying chips? Because Apple's dominant position as a monopsonist means it has price setting power and depresses the profits in the chip industry, making all but the cheapest locations effectively unsustainable. Monopsonists essentially absorb the profits of their suppliers. This is for example why nationalized health services are cheap.
- kergonath 2y ago
  This does not sound like a complete picture. Apple might depress the prices for themselves, but not for other fab customers. On the contrary, if there is a supply issue, with one customer getting all the production, then prices should go up overall, helping competing fabs. In a situation with a huge production shortfall, it becomes a matter of initial capital, with which governments can help effectively (either with subsidies or with tax incentives). If the customers are there and demand is strong, eventual RoI should be ok. In your example, not only has the government huge bargaining power, but the law itself limits other customers, and this there is no demand outside of the government. In contrast, there are plenty of customers for semiconductors. Demand is still here. So yes, Apple might reduce TSMC’s margin, but the real problem is not that. It’s that there is nobody else operating on the same scale. The fact that there is no alternative for cutting edge nodes is a sign of a market failure. Besides, this “it’s Apple fault and they depress margins” sounds disingenuous. Apple famously invested quite a lot in TSMC’s fabs in exchange for this access to the latest nodes. And TSMC also benefits from stable, predictable demand. The real problem is the spectacular failure of Intel and the complete lack of effectiveness of the handful of governments that could do something. Things seem to be changing, even if it is slow, but we should never have been in that situation in the first place.
  - Barrin92 2y ago
    >but not for other fab customers there aren't that many, that's the point. Apple is responsible for most of its suppliers revenue as the article points out, otherwise it wouldn't have price setting power to begin with. We aren't in a supply shortage, with the exception of a bunch of AI related chips (the only thing the media talks about, hence the skewed perception) we've bin in a supply glut. Semiconductor revenue declined by 11% last year. AI chips aren't the only chips in the world, DRAM makers like Micron, an American manufacturer are the kinds of companies that are effectively at the mercy of Apple because of how outsized of a portion of the market they are.
windexh8er 2y ago
It's not just TSMC chips. Apple forces other chip manufacturers into exclusive deals to lock out the ability for 3rd party repair to be done cost effectively and reliably. Apple shouldn't be able to control the chip markets as they do. As indicated in the article they create slave labor conditions in a lot of these manufacturers because they're wholly dependent on Apple's whims. This also creates an e-waste problem globally as Apple inhibits the ability to more easily repair their hardware. Louis Rossman has some great examples [0] of Apple continuing to put defective hardware into devices that Apple knows will, and has, failed and there is no easy way to replace these components because Apple has locked up the supply chain via purchasing all available inventory and having exclusive rights to non-proprietary chips. This means you can't repair a device you own at a fiscally fair price. Instead you're forced into buying an entire assembly so Apple can charge a much higher multiple on a part that has higher margins which may just force you to buy an entirely new product because of the price point differential. [0] https://youtube.com/watch?v=Z0DF-MOkotA&feature=shared https://youtube.com/watch?v=Z0DF-MOkotA&feature=shared
- rbanffy 2y ago
  > Apple inhibits the ability to more easily repair their hardware. This is why we need right-to-repair legislation with teeth.
- JumpCrisscross 2y ago
  > Apple forces other chip manufacturers into exclusive deals to lock out the ability for 3rd party repair to be done cost effectively and reliably How is this relevant to the chips TSMC manufactures? You can't exactly hand solder a 24nm feature.
- Kirby64 2y ago
  There’s no “forcing” chip manufacturers into exclusivity deals. Chip vendors want the business, and Apple wants stuff customized for them. Plenty of IP that can be used in general market parts, too. Also, I can guarantee you that there’s a good amount of vendors that would rather not be forced to offer their chips that they provide to Apple on the general market.

by causal 2y ago

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.

causal 2y ago
That much seems easy to believe, I just find it hard to connect that to an obstacle for domestic chip production
rbanffy 2y ago
Tim Cook has an obligation towards the shareholders and takes it seriously. As an Apple shareholder who doesn’t live in the US, moving to US chip suppliers would not help with his obligations towards me. I do like the US - don’t get me wrong - but Apple is in the business of making devices, not making investments the government should be at least facilitating.
- e44858 2y ago
  That's why we need tariffs, to make Apple suffer financially if they refuse to move production back to the US.
  - rbanffy 2y ago
    As a shareholder, I wouldn't be impressed. As a supporter of a more just and equal planet, I'd be in. Be mindful that such tariffs wouldn't hit Apple alone.
    - necovek 2y ago
      "For a company with a market valuation of over 2T dollars at the time of import, import tariffs ..." :)

Barrin92 2y ago

>How would reshoring chip production be easier if Apple weren't out there buying chips? Because Apple's dominant position as a monopsonist means it has price setting power and depresses the profits in the chip industry, making all but the cheapest locations effectively unsustainable. Monopsonists essentially absorb the profits of their suppliers. This is for example why nationalized health services are cheap.

kergonath 2y ago
This does not sound like a complete picture. Apple might depress the prices for themselves, but not for other fab customers. On the contrary, if there is a supply issue, with one customer getting all the production, then prices should go up overall, helping competing fabs. In a situation with a huge production shortfall, it becomes a matter of initial capital, with which governments can help effectively (either with subsidies or with tax incentives). If the customers are there and demand is strong, eventual RoI should be ok. In your example, not only has the government huge bargaining power, but the law itself limits other customers, and this there is no demand outside of the government. In contrast, there are plenty of customers for semiconductors. Demand is still here. So yes, Apple might reduce TSMC’s margin, but the real problem is not that. It’s that there is nobody else operating on the same scale. The fact that there is no alternative for cutting edge nodes is a sign of a market failure. Besides, this “it’s Apple fault and they depress margins” sounds disingenuous. Apple famously invested quite a lot in TSMC’s fabs in exchange for this access to the latest nodes. And TSMC also benefits from stable, predictable demand. The real problem is the spectacular failure of Intel and the complete lack of effectiveness of the handful of governments that could do something. Things seem to be changing, even if it is slow, but we should never have been in that situation in the first place.
- Barrin92 2y ago
  >but not for other fab customers there aren't that many, that's the point. Apple is responsible for most of its suppliers revenue as the article points out, otherwise it wouldn't have price setting power to begin with. We aren't in a supply shortage, with the exception of a bunch of AI related chips (the only thing the media talks about, hence the skewed perception) we've bin in a supply glut. Semiconductor revenue declined by 11% last year. AI chips aren't the only chips in the world, DRAM makers like Micron, an American manufacturer are the kinds of companies that are effectively at the mercy of Apple because of how outsized of a portion of the market they are.

windexh8er 2y ago

It's not just TSMC chips. Apple forces other chip manufacturers into exclusive deals to lock out the ability for 3rd party repair to be done cost effectively and reliably. Apple shouldn't be able to control the chip markets as they do. As indicated in the article they create slave labor conditions in a lot of these manufacturers because they're wholly dependent on Apple's whims. This also creates an e-waste problem globally as Apple inhibits the ability to more easily repair their hardware. Louis Rossman has some great examples [0] of Apple continuing to put defective hardware into devices that Apple knows will, and has, failed and there is no easy way to replace these components because Apple has locked up the supply chain via purchasing all available inventory and having exclusive rights to non-proprietary chips. This means you can't repair a device you own at a fiscally fair price. Instead you're forced into buying an entire assembly so Apple can charge a much higher multiple on a part that has higher margins which may just force you to buy an entirely new product because of the price point differential. [0] https://youtube.com/watch?v=Z0DF-MOkotA&feature=shared https://youtube.com/watch?v=Z0DF-MOkotA&feature=shared

rbanffy 2y ago
> Apple inhibits the ability to more easily repair their hardware. This is why we need right-to-repair legislation with teeth.
JumpCrisscross 2y ago
> Apple forces other chip manufacturers into exclusive deals to lock out the ability for 3rd party repair to be done cost effectively and reliably How is this relevant to the chips TSMC manufactures? You can't exactly hand solder a 24nm feature.
Kirby64 2y ago
There’s no “forcing” chip manufacturers into exclusivity deals. Chip vendors want the business, and Apple wants stuff customized for them. Plenty of IP that can be used in general market parts, too. Also, I can guarantee you that there’s a good amount of vendors that would rather not be forced to offer their chips that they provide to Apple on the general market.