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I tend to agree with you, feels to me like the root of this is essentially whether foundries will "go all in" on AI like the rest of the S&P 500. But why trade

I tend to agree with you, feels to me like the root of this is essentially whether foundries will "go all in" on AI like the rest of the S&P 500. But why trade away one trillion-dollar customer for another trillion-dollar customer if the first one is never going away, and the second one might?

Fiveplus 9mo ago
I think it is less of a trade and more of a symbiotic capital cycle, if I can call it that? Nvidia's willingness to pay exorbitant prices for early 2nm wafers subsidizes the R&D and the brutal yield-learning curve for the entire node. But you can't run a sustainable gigafab solely on GPUs...the defect density math is too punishing. You need a high-volume, smaller-die customer (Apple) to come in 18 months later, soak up the remaining 90% of capacity and amortize that depreciation schedule over a decade.
- alex43578 9mo ago
  Isn’t the smaller die aspect more valuable early in the node’s maturity, where defects are less punishing?
  - Fiveplus 9mo ago
    That is the traditional textbook yield curve logic, if I'm not wrong? Smaller area = higher probability of a surviving die on a dirty wafer. But I wonder if the sheer margin on AI silicon basically breaks that rule? If Nvidia can sell a reticle-sized package for 25k-30k USD, they might be perfectly happy paying for a wafer that only yields 30-40% good dies. Apple OTOH operates at consumer electronics price points. They need mature yields (>90%) to make the unit economics of an iPhone work. There's also the binning factor I am curious about. Nvidia can disable 10% of the cores on a defective GPU and sell it as a lower SKU. Does Apple have that same flexibility with a mobile SoC where the thermal or power envelope is so tightly coupled to the battery size?
    - genocidicbunny 9mo ago
      I am curious about the binning factor too since in the past, AMD and Intel have both made use of defect binning to still sell usable chips by disabling cores. Perhaps Apple is able to do the same with their SoCs? It's not likely to be as granular as Nvidia who can disable much smaller areas of the silicon for each of their cores. On the other hand, the specifics of the silicon and the layout of the individual cores, not to mention the spread of defects over the die might mitigate that advantage.
      - ricw 9mo ago
        They do bin their chips. Across the range (A- and M-series) they have the same chip with fewer / disabled cpu and gpu cores. You pray a premium for ones with more cores. Unsure about the chip frequencies - Apple doesn’t disclose those openly from what I know.
    - nebula8804 9mo ago
      I thought they binned CPUs for things like AppleTV and lower cost iPads?
      - jsheard 9mo ago
        Yeah, most of their chips have two or more bins with different core configs, and the lower bins probably use salvaged dies. For example the regular M4 can have 4 P-cores / 6 E-cores / 10 GPU cores, or 3/6/10 cores, or 4/4/8 cores, depending on the device. They even do it on the smaller A-series chips - the A15 could be 2/4/5, 2/4/4, or 2/3/5.
    - alex43578 9mo ago
      With current AI pricing for silicon, I think the math’s gone out the window. For Apple, they have binning flexibility, with Pro/Max/Ultra, all the way down to iPads - and that’s after the node yields have been improved via the gazillion iPhone SoC dies. NVIDIAs flexibility came from using some of those binned dies for GeForce cards, but the VRAM situation is clearly making that less important, as they’re cutting some of those SKUs for being too vram heavy relative to MSRP.
alt227 9mo ago
Why are foundries going 'All In' on AI? They fab chips for customers, doesnt matter what chips they are and who the customer is.'Who will pay the most for us to make their chips first' is the only question TMSC will be asking. The market of the customer is irrelevant.

Fiveplus 9mo ago

I think it is less of a trade and more of a symbiotic capital cycle, if I can call it that? Nvidia's willingness to pay exorbitant prices for early 2nm wafers subsidizes the R&D and the brutal yield-learning curve for the entire node. But you can't run a sustainable gigafab solely on GPUs...the defect density math is too punishing. You need a high-volume, smaller-die customer (Apple) to come in 18 months later, soak up the remaining 90% of capacity and amortize that depreciation schedule over a decade.

alex43578 9mo ago
Isn’t the smaller die aspect more valuable early in the node’s maturity, where defects are less punishing?
- Fiveplus 9mo ago
  That is the traditional textbook yield curve logic, if I'm not wrong? Smaller area = higher probability of a surviving die on a dirty wafer. But I wonder if the sheer margin on AI silicon basically breaks that rule? If Nvidia can sell a reticle-sized package for 25k-30k USD, they might be perfectly happy paying for a wafer that only yields 30-40% good dies. Apple OTOH operates at consumer electronics price points. They need mature yields (>90%) to make the unit economics of an iPhone work. There's also the binning factor I am curious about. Nvidia can disable 10% of the cores on a defective GPU and sell it as a lower SKU. Does Apple have that same flexibility with a mobile SoC where the thermal or power envelope is so tightly coupled to the battery size?
  - genocidicbunny 9mo ago
    I am curious about the binning factor too since in the past, AMD and Intel have both made use of defect binning to still sell usable chips by disabling cores. Perhaps Apple is able to do the same with their SoCs? It's not likely to be as granular as Nvidia who can disable much smaller areas of the silicon for each of their cores. On the other hand, the specifics of the silicon and the layout of the individual cores, not to mention the spread of defects over the die might mitigate that advantage.
    - ricw 9mo ago
      They do bin their chips. Across the range (A- and M-series) they have the same chip with fewer / disabled cpu and gpu cores. You pray a premium for ones with more cores. Unsure about the chip frequencies - Apple doesn’t disclose those openly from what I know.
  - nebula8804 9mo ago
    I thought they binned CPUs for things like AppleTV and lower cost iPads?
    - jsheard 9mo ago
      Yeah, most of their chips have two or more bins with different core configs, and the lower bins probably use salvaged dies. For example the regular M4 can have 4 P-cores / 6 E-cores / 10 GPU cores, or 3/6/10 cores, or 4/4/8 cores, depending on the device. They even do it on the smaller A-series chips - the A15 could be 2/4/5, 2/4/4, or 2/3/5.
  - alex43578 9mo ago
    With current AI pricing for silicon, I think the math’s gone out the window. For Apple, they have binning flexibility, with Pro/Max/Ultra, all the way down to iPads - and that’s after the node yields have been improved via the gazillion iPhone SoC dies. NVIDIAs flexibility came from using some of those binned dies for GeForce cards, but the VRAM situation is clearly making that less important, as they’re cutting some of those SKUs for being too vram heavy relative to MSRP.

alt227 9mo ago

Why are foundries going 'All In' on AI? They fab chips for customers, doesnt matter what chips they are and who the customer is.'Who will pay the most for us to make their chips first' is the only question TMSC will be asking. The market of the customer is irrelevant.