5 ms·

At this scale and volume, it's not really about good faith. Changing fabs is non-trivial. If they pushed Apple to a point where they had to find an alternative

by Aurornis 10mo ago

At this scale and volume, it's not really about good faith. Changing fabs is non-trivial. If they pushed Apple to a point where they had to find an alternative (which is another story) and Apple did switch, they would have to work extra hard to get them back in the future. Apple wouldn't want to invest twice in changing back and forth. On the other hand, TSMC knows that changing fabs is not really an option and Apple doesn't want to do it anyway, so they have leverage to squeeze. At this level, everyone knows it's just business and it comes down to optimizing long-term risk/reward for each party.

CodeWriter23 10mo ago
Apple is the company that just over 10 years ago made a strategic move to remove Intel from their supply chain by purchasing a semiconductor firm and licensing ARM. Managing 'painful' transitions is a core competency of theirs.
- wtallis 10mo ago
  Which acquisition are you referring to? Apple bought PA Semi in 2008 and Intrinsity in 2010.
  - CodeWriter23 10mo ago
    PA, Intrinsity wasn't front of mind for me. My point is, Apple has proven they can buy their way into vertical integration, let's look at the history. 68K -> PowerPC, practically seamless Mac OS 9 -> BSD / OS X with excellent backward compatibility PowerPC -> x86 x86 -> ARM Each major transition, biting off orders of magnitude more complexity of integration. Looking at this continuum, the next logical vertical integration step for Apple is fabrication. The only question in my mind, does Tim have the guts to take that risk.
- Zafira 10mo ago
  I think you’re correct that they’re good at just ripping the band-aid off, but the details seem off. AFAIK, Apple has always had a license with ARM and a very unique one since they were one of the initial investors when it was spun out from Acorn. In fact, my understanding is that Apple is the one that insisted they call themselves Advanced RISC Machines Ltd. because they did not want Acorn (a competitor) in the name of a company they were investing in.
  - steve1977 10mo ago
    Correct, from the ARM Wikipedia entry: The new Apple–ARM work would eventually evolve into the ARM6, first released in early 1992. Apple used the ARM6-based ARM610 as the basis for their Apple Newton PDA.
- deeringc 10mo ago
  Doesn't Apple have an ARM "Architectural License" arising from being one of the original founding firms behind ARM, which they helped create back in the 90s for the Apple Newton. That license allows them to design their own ARM-compatible chips. The companies they bought more recently gave them the talent to use their existing license, but they always had the right to design their own chips.
philistine 10mo ago
Apple has used both Samsung and TSMC for its chips in the past. Until the A7 it was Samsung, A8 was TSMC, and the A9 was dual-sourced by both! Apple is used to switching between suppliers fairly often for a tech company; it's not that it's too hard for them to switch fab, it's that TSMC is the only competitive fab right now. There are rumours that Intel might have won some business from them in 2 years. I could totally see Apple turning to Intel for the Mac chips, since they're much lower volume. I know it sounds crazy, we just got rid of Intel, but I'm talking using Intel as a fab, not going back to x86. Those are done.
- lukan 10mo ago
  But wasn't the reason they split with Samsung because they copied the iphone in the perspective of Jobs (to which he reacted with thermonuclear threats)? They did had the expertise building it after all. What would happen, if TSMC now would build a M1 clone? I doubt this is a way anyone wants to go, but it seems a implied threat to me that is calculated in.
  - thewebguyd 10mo ago
    Job's thermonuclear threats were about Android & Google, not Samsung because Schmidt was on Apple's board during the development of Android. > "I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong. I’m going to destroy Android, because it’s a stolen product. I’m willing to go thermonuclear war on this." The falling out with Samsung was related, but more about the physical look of the phone
    - wtetzner 10mo ago
      > because it’s a stolen product This is funny coming from Jobs.
      - asciii 10mo ago
        > good artists copy great artists steal - pablo picasso - steve jobs
7speter 10mo ago
I would imagine they could split their orders between different fabricators; they can put in orders for the most cutting edge chips for the latest Macs and iPhones at TSMC and go elsewhere for less cutting edge chips?
- fsckboy 10mo ago
  presumably they already do that (since non cutting edge chip fab is likely to be more competitive and less expensive) so, given they are already doing that, this problem refers to the cutting edge allocations which are getting scare as exemplified at least by Nvidia's growth
MBCook 10mo ago
Not all of Apple‘s chips need to be fabbed at the smallest size, those could certainly go elsewhere. I’m sure they already do. Is there anyone who can match TSMC at this point for the top of the line M or A chips? Even if Intel was ready and Apple wanted to would they be able to supply even 10% of what Apple needs for the yearly iPhone supply?
- throwaway2037 10mo ago
  > Not all of Apple‘s chips need to be fabbed at the smallest size, those could certainly go elsewhere. When I saw that TSMC continues to run old fabs, I immediately thought about this idea. I am sure when Apple is designing various chips for their products, they design for a specific node based on available capacity. Not all chips need to be the smallest node size. Another thing: I am seeing a bunch of comments here alluding to Apple changing fabs. While I am not an expert, it is surely much harder than people understand. The precise process of how transistors are made is different in each fab. I highly doubt it is trivial to change fabs.
  - MBCook 10mo ago
    My understanding, and I’m a layman, is it basically requires making new masks. And that’s not trivial. I guess you’d be doing that anyway with a brand new chip. But still probably easier to work with the tools/fab you know well. I suppose you’d have to do it just switching nodes at TSMC. Which is why the A13 (or whatever) probably never moves to smaller nodes. Sometimes Apple updates the chip in a product that doesn’t seem to need it, like the AppleTV. I wonder if it’s because the old node is going away and it’s easier to just use a newer chip that was designed for the newer node.
jongjong 10mo ago
It's ridiculous that a trillion dollar company feels beholden to a supplier. With that kind of money, it should be trivial to switch. People forget Nvidia didn't even exist 35 years ago. It would probably take like 3 to 5 years to catch up with the benefit of hindsight and existing talent and tools? And anyway consumers don't really need beefy devices nowadays. Running local LLM on a smartphone is a terrible idea due to battery life and no graphics card; AI is going to be running on servers for quite some time if not forever. It's almost as if there is a constant war to suppress engineer wages... That's the only variable being affected here which could benefit from increased competition. If tech sector is so anti-competitive, the government should just seize it and nationalize it. It's not capitalism when these megacorps put all this superficial pressure but end up making deals all the time. We need more competition, no deals! If they don't have competition, might as well have communism.
- cgio 10mo ago
  It can be interpreted a different way too. Apple is just a channel for TSMCs technology. Also the cost to build a fab that advanced, in say a 3 year horizon, let alone immediately available, is not one even Apple can commit to without cannibalising its core business.
- seawsurf 10mo ago
  I know you are maybe joking but I don't think the government nationalizing the tech sector would be a good idea. They can pull down the salaries even more if they want. It can become a dead end job with you stuck on archaic technology from older systems. Government jobs should only be an option if there are enough social benefits.
  - jongjong 10mo ago
    I'm joking yes but as an engineer who has seen the bureaucracy in most big tech companies, the joke is getting less funny over time. I've met many software engineers who call themselves communists. I can kind of understand. This kind of communist-like bureaucracy doesn't work well in a capitalist environment. It's painful to work in tech. It's like our hands are tied and are forced to do things in a way we know is inefficient. Companies use 'security' as an excuse to restrict options (tools and platforms), treat engineers as replaceable cogs as an alternative to trusting them to do their job properly... And the companies harvest what they sow. They get reliable cogs, well versed in compliance and groupthink and also coincidentally full-blown communists; they're the only engineers remaining who actually enjoy the insane bureaucracy and the social climbing opportunities it represents given the lack of talent.
NoMoreNicksLeft 10mo ago
>On the other hand, TSMC knows that changing fabs is not really an option and Apple doesn't want to do it anyway, so they have leverage to squeeze. They're Apple. If TSMC fucks around too much, they might just start working towards building their own fab.
ksec 10mo ago
I think this misses a key point. TSMC is leading edge. When Apple switched they were leading edge for pure play, but not far ahead of Samsung and certainly behind Intel. Now not only TSMC is the best, it is also the largest. Which means Apple don't have a choice. It the old days the leverage was that without Apple, no one is willing to pay for leading edge foundry development, at least not enough money to make it so compared to Apple. Now it is different. The demands for AI meant plenty of money to go around. And Nvidia is the one to beat, not Apple any more. The good thing for Apple is that as long as Nvidia continues to grow, their order can be spilt between them. No more relying on single vendor to pus.
_heimdall 10mo ago
Apple knows first hand how difficult and expensive it is to fire your CEO, I mean chip fab, only to rehire them when its clear that decision didn't pan out.

CodeWriter23 10mo ago

Apple is the company that just over 10 years ago made a strategic move to remove Intel from their supply chain by purchasing a semiconductor firm and licensing ARM. Managing 'painful' transitions is a core competency of theirs.

wtallis 10mo ago
Which acquisition are you referring to? Apple bought PA Semi in 2008 and Intrinsity in 2010.
- CodeWriter23 10mo ago
  PA, Intrinsity wasn't front of mind for me. My point is, Apple has proven they can buy their way into vertical integration, let's look at the history. 68K -> PowerPC, practically seamless Mac OS 9 -> BSD / OS X with excellent backward compatibility PowerPC -> x86 x86 -> ARM Each major transition, biting off orders of magnitude more complexity of integration. Looking at this continuum, the next logical vertical integration step for Apple is fabrication. The only question in my mind, does Tim have the guts to take that risk.
Zafira 10mo ago
I think you’re correct that they’re good at just ripping the band-aid off, but the details seem off. AFAIK, Apple has always had a license with ARM and a very unique one since they were one of the initial investors when it was spun out from Acorn. In fact, my understanding is that Apple is the one that insisted they call themselves Advanced RISC Machines Ltd. because they did not want Acorn (a competitor) in the name of a company they were investing in.
- steve1977 10mo ago
  Correct, from the ARM Wikipedia entry: The new Apple–ARM work would eventually evolve into the ARM6, first released in early 1992. Apple used the ARM6-based ARM610 as the basis for their Apple Newton PDA.
deeringc 10mo ago
Doesn't Apple have an ARM "Architectural License" arising from being one of the original founding firms behind ARM, which they helped create back in the 90s for the Apple Newton. That license allows them to design their own ARM-compatible chips. The companies they bought more recently gave them the talent to use their existing license, but they always had the right to design their own chips.

philistine 10mo ago

Apple has used both Samsung and TSMC for its chips in the past. Until the A7 it was Samsung, A8 was TSMC, and the A9 was dual-sourced by both! Apple is used to switching between suppliers fairly often for a tech company; it's not that it's too hard for them to switch fab, it's that TSMC is the only competitive fab right now. There are rumours that Intel might have won some business from them in 2 years. I could totally see Apple turning to Intel for the Mac chips, since they're much lower volume. I know it sounds crazy, we just got rid of Intel, but I'm talking using Intel as a fab, not going back to x86. Those are done.

lukan 10mo ago
But wasn't the reason they split with Samsung because they copied the iphone in the perspective of Jobs (to which he reacted with thermonuclear threats)? They did had the expertise building it after all. What would happen, if TSMC now would build a M1 clone? I doubt this is a way anyone wants to go, but it seems a implied threat to me that is calculated in.
- thewebguyd 10mo ago
  Job's thermonuclear threats were about Android & Google, not Samsung because Schmidt was on Apple's board during the development of Android. > "I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong. I’m going to destroy Android, because it’s a stolen product. I’m willing to go thermonuclear war on this." The falling out with Samsung was related, but more about the physical look of the phone
  - wtetzner 10mo ago
    > because it’s a stolen product This is funny coming from Jobs.
    - asciii 10mo ago
      > good artists copy great artists steal - pablo picasso - steve jobs

7speter 10mo ago

I would imagine they could split their orders between different fabricators; they can put in orders for the most cutting edge chips for the latest Macs and iPhones at TSMC and go elsewhere for less cutting edge chips?

fsckboy 10mo ago
presumably they already do that (since non cutting edge chip fab is likely to be more competitive and less expensive) so, given they are already doing that, this problem refers to the cutting edge allocations which are getting scare as exemplified at least by Nvidia's growth

MBCook 10mo ago

Not all of Apple‘s chips need to be fabbed at the smallest size, those could certainly go elsewhere. I’m sure they already do. Is there anyone who can match TSMC at this point for the top of the line M or A chips? Even if Intel was ready and Apple wanted to would they be able to supply even 10% of what Apple needs for the yearly iPhone supply?

throwaway2037 10mo ago
> Not all of Apple‘s chips need to be fabbed at the smallest size, those could certainly go elsewhere. When I saw that TSMC continues to run old fabs, I immediately thought about this idea. I am sure when Apple is designing various chips for their products, they design for a specific node based on available capacity. Not all chips need to be the smallest node size. Another thing: I am seeing a bunch of comments here alluding to Apple changing fabs. While I am not an expert, it is surely much harder than people understand. The precise process of how transistors are made is different in each fab. I highly doubt it is trivial to change fabs.
- MBCook 10mo ago
  My understanding, and I’m a layman, is it basically requires making new masks. And that’s not trivial. I guess you’d be doing that anyway with a brand new chip. But still probably easier to work with the tools/fab you know well. I suppose you’d have to do it just switching nodes at TSMC. Which is why the A13 (or whatever) probably never moves to smaller nodes. Sometimes Apple updates the chip in a product that doesn’t seem to need it, like the AppleTV. I wonder if it’s because the old node is going away and it’s easier to just use a newer chip that was designed for the newer node.

jongjong 10mo ago

It's ridiculous that a trillion dollar company feels beholden to a supplier. With that kind of money, it should be trivial to switch. People forget Nvidia didn't even exist 35 years ago. It would probably take like 3 to 5 years to catch up with the benefit of hindsight and existing talent and tools? And anyway consumers don't really need beefy devices nowadays. Running local LLM on a smartphone is a terrible idea due to battery life and no graphics card; AI is going to be running on servers for quite some time if not forever. It's almost as if there is a constant war to suppress engineer wages... That's the only variable being affected here which could benefit from increased competition. If tech sector is so anti-competitive, the government should just seize it and nationalize it. It's not capitalism when these megacorps put all this superficial pressure but end up making deals all the time. We need more competition, no deals! If they don't have competition, might as well have communism.

cgio 10mo ago
It can be interpreted a different way too. Apple is just a channel for TSMCs technology. Also the cost to build a fab that advanced, in say a 3 year horizon, let alone immediately available, is not one even Apple can commit to without cannibalising its core business.
seawsurf 10mo ago
I know you are maybe joking but I don't think the government nationalizing the tech sector would be a good idea. They can pull down the salaries even more if they want. It can become a dead end job with you stuck on archaic technology from older systems. Government jobs should only be an option if there are enough social benefits.
- jongjong 10mo ago
  I'm joking yes but as an engineer who has seen the bureaucracy in most big tech companies, the joke is getting less funny over time. I've met many software engineers who call themselves communists. I can kind of understand. This kind of communist-like bureaucracy doesn't work well in a capitalist environment. It's painful to work in tech. It's like our hands are tied and are forced to do things in a way we know is inefficient. Companies use 'security' as an excuse to restrict options (tools and platforms), treat engineers as replaceable cogs as an alternative to trusting them to do their job properly... And the companies harvest what they sow. They get reliable cogs, well versed in compliance and groupthink and also coincidentally full-blown communists; they're the only engineers remaining who actually enjoy the insane bureaucracy and the social climbing opportunities it represents given the lack of talent.

NoMoreNicksLeft 10mo ago

>On the other hand, TSMC knows that changing fabs is not really an option and Apple doesn't want to do it anyway, so they have leverage to squeeze. They're Apple. If TSMC fucks around too much, they might just start working towards building their own fab.

ksec 10mo ago

I think this misses a key point. TSMC is leading edge. When Apple switched they were leading edge for pure play, but not far ahead of Samsung and certainly behind Intel. Now not only TSMC is the best, it is also the largest. Which means Apple don't have a choice. It the old days the leverage was that without Apple, no one is willing to pay for leading edge foundry development, at least not enough money to make it so compared to Apple. Now it is different. The demands for AI meant plenty of money to go around. And Nvidia is the one to beat, not Apple any more. The good thing for Apple is that as long as Nvidia continues to grow, their order can be spilt between them. No more relying on single vendor to pus.

_heimdall 10mo ago

Apple knows first hand how difficult and expensive it is to fire your CEO, I mean chip fab, only to rehire them when its clear that decision didn't pan out.