5 ms·

When you buy such a huge part of the available capacity then you are in the position to bargain like this, unlike "smaller" clients.

meragrin_ 4y ago
But TSMC can delay 3nm until it has the clients. Enough of the "smaller" players will eventually want and pay for it. Apple is far more dependent on TSMC than TSMC is on Apple. Where else is Apple going to go to realistically? It would likely take 3-5 years to fund another competitor to bring it up to what is needed.
- mschuster91 4y ago
  > It would likely take 3-5 years to fund another competitor to bring it up to what is needed. Apple has done precisely this multiple times or even bought up companies to have that level of vertical integration. With Apple's cash war chest, they can afford everything.
  - The_Colonel 4y ago
    That would mean having sub-optimal chips for 3-5 years in their products while Qualcomm/AMD could finally catch up. TSMC having undisputedly best litography is advantageous to Apple. It means Apple can buy the whole production and nobody else will be able to compete with their chips. They will lose this if they will make the field more competitive by propping up a competitor.
  - marticode 4y ago
    Apple can afford everything but regulators can stop it from happening, especially if it's a strategic target.
    - mschuster91 4y ago
      Regulatory agencies can stop them from buying TSMC, but they cannot prevent Apple from creating its own fab business.
      - marticode 4y ago
        Sure, but good luck with that endeavor. Samsung and Intel are struggling to keep up with TSMC despite decades of expertise in the field and very deep pockets, so starting from scratch even with infinite money isn't gonna be a picnic. And won't solve Apple problem in the short term.
        mschuster91 4y ago
        If there is one thing modern Apple is famous for, it is to dislike any situation where they depend on one single external vendor for anything. Apple wants either a somewhat healthy competition (e.g. with batteries, screens or assembly where misbehaving suppliers can be replaced rapidly) or vertical integration - and their acquisition of Intel's mobile modem business shows they think in long terms anyway. In any case, Apple investing into their own fab also makes sense from a geopolitical point. Apple is already beginning to diversify from China because of their shoddy covid policies causing delays all the time, and everyone can see the writing on the wall that says China is very high on the sanctions priority list of the West. Additionally, the threat of China invading Taiwan and TSMCs fabs getting blown up in a scorched-earth action or damaged by war is only growing bigger every day.
        LegitShady 4y ago
        what he's trying to say is that the best companies in the world at chipmaking aren't keeping up with TSMC. Not because they don't have money to spend, but because the problem is really hard and there is a lot of room for 'not complete' failure. You could be completely successful in making chips at small node sizes and have someone out-compete you, meaning your chips are less performant than the competition and you look worse, and it cost you tens of billions of dollars to get there. That's what samsung and intel have been experiencing for several years now. One thing apple isn't famous for is manufacturing cpus. It's hard. They buy parts from other companies and pay yet another company to assemble them. There is no one to buy or fund to instantly catch up, and even if you did, next year you may be out again. It's not an easy problem where throwing money means you win, and apple has the most money.
        4y ago
  - meragrin_ 4y ago
    > With Apple's cash war chest, they can afford everything. Including TSMC's price. When push comes to shove, accepting the price hike would likely be the cheapest option.
    - 0x457 4y ago
      Apple is about long-term. Short-term, yes, accepting the hike is the cheapest. However, it opens you up for future price hikes. Yeah, they can't just switch to Samsung or acquire and uplift GloFo, join venture with Intel also won't work. Long-term, though, they can start working on this.
- doikor 4y ago
  And it isn’t just about money. There is a lot of skill/expertise at TSMC that makes things work. Both Intel and Samsung have been chasing TSMC for years now spending billions on their fabs but neither has managed to catch up.
- nspattak 4y ago
  From what I hear apple's latest chips are already so far ahead of amd64 in performance and power consumption that they can easily wait a couple of years. I do not think that this is what they actually want to do, i am only saying that they can even afford that for a few years if they have to. I am not sure that there is enough demand from smaller clients to 100% cover apple's usual capacity. in short this seems to be a real bras de faire :)
  - sfifs 4y ago
    The vast majority of Apple chips are phones, not Macs. Samsung is neck & neck and their top end phones are definitely competitive, performing better in many ways for many people.
  - colinmhayes 4y ago
    Apple's chips are better largely because they're the only one on TSMC 5. If apple went to say samsung they'd end up on a worse 5nm process while AMD takes up the 3nm capacity Apple just ditched.
- Someone 4y ago
  > Enough of the "smaller" players will eventually want and pay for it. At the right price, everybody wants it, but TSMC wants a high price now, to recoup their investment on the new process. If they drop their price now, that will take a long time, and may even be never, as, over time, competition will drive down margins. Apple may be fairly unique in having a “right price” that is a lot higher than that of other players while they also are willing to order hundreds of millions units.
- perlgeek 4y ago
  > But TSMC can delay 3nm until it has the clients. My impression is that they invested huge sums of money into the 3nm lines; you don't want to delay getting returns on such investments. Considering that capital has a cost, it might be cheaper for them to forego the 6% increase (at least for now) and start returning some of their loans, rather than letting the interest accumulate. (Which Apple knows, of course, which is why they play hardball).

meragrin_ 4y ago

But TSMC can delay 3nm until it has the clients. Enough of the "smaller" players will eventually want and pay for it. Apple is far more dependent on TSMC than TSMC is on Apple. Where else is Apple going to go to realistically? It would likely take 3-5 years to fund another competitor to bring it up to what is needed.

mschuster91 4y ago
> It would likely take 3-5 years to fund another competitor to bring it up to what is needed. Apple has done precisely this multiple times or even bought up companies to have that level of vertical integration. With Apple's cash war chest, they can afford everything.
- The_Colonel 4y ago
  That would mean having sub-optimal chips for 3-5 years in their products while Qualcomm/AMD could finally catch up. TSMC having undisputedly best litography is advantageous to Apple. It means Apple can buy the whole production and nobody else will be able to compete with their chips. They will lose this if they will make the field more competitive by propping up a competitor.
- marticode 4y ago
  Apple can afford everything but regulators can stop it from happening, especially if it's a strategic target.
  - mschuster91 4y ago
    Regulatory agencies can stop them from buying TSMC, but they cannot prevent Apple from creating its own fab business.
    - marticode 4y ago
      Sure, but good luck with that endeavor. Samsung and Intel are struggling to keep up with TSMC despite decades of expertise in the field and very deep pockets, so starting from scratch even with infinite money isn't gonna be a picnic. And won't solve Apple problem in the short term.
      - mschuster91 4y ago
        If there is one thing modern Apple is famous for, it is to dislike any situation where they depend on one single external vendor for anything. Apple wants either a somewhat healthy competition (e.g. with batteries, screens or assembly where misbehaving suppliers can be replaced rapidly) or vertical integration - and their acquisition of Intel's mobile modem business shows they think in long terms anyway. In any case, Apple investing into their own fab also makes sense from a geopolitical point. Apple is already beginning to diversify from China because of their shoddy covid policies causing delays all the time, and everyone can see the writing on the wall that says China is very high on the sanctions priority list of the West. Additionally, the threat of China invading Taiwan and TSMCs fabs getting blown up in a scorched-earth action or damaged by war is only growing bigger every day.
        LegitShady 4y ago
        what he's trying to say is that the best companies in the world at chipmaking aren't keeping up with TSMC. Not because they don't have money to spend, but because the problem is really hard and there is a lot of room for 'not complete' failure. You could be completely successful in making chips at small node sizes and have someone out-compete you, meaning your chips are less performant than the competition and you look worse, and it cost you tens of billions of dollars to get there. That's what samsung and intel have been experiencing for several years now. One thing apple isn't famous for is manufacturing cpus. It's hard. They buy parts from other companies and pay yet another company to assemble them. There is no one to buy or fund to instantly catch up, and even if you did, next year you may be out again. It's not an easy problem where throwing money means you win, and apple has the most money.
      - 4y ago
- meragrin_ 4y ago
  > With Apple's cash war chest, they can afford everything. Including TSMC's price. When push comes to shove, accepting the price hike would likely be the cheapest option.
  - 0x457 4y ago
    Apple is about long-term. Short-term, yes, accepting the hike is the cheapest. However, it opens you up for future price hikes. Yeah, they can't just switch to Samsung or acquire and uplift GloFo, join venture with Intel also won't work. Long-term, though, they can start working on this.
doikor 4y ago
And it isn’t just about money. There is a lot of skill/expertise at TSMC that makes things work. Both Intel and Samsung have been chasing TSMC for years now spending billions on their fabs but neither has managed to catch up.
nspattak 4y ago
From what I hear apple's latest chips are already so far ahead of amd64 in performance and power consumption that they can easily wait a couple of years. I do not think that this is what they actually want to do, i am only saying that they can even afford that for a few years if they have to. I am not sure that there is enough demand from smaller clients to 100% cover apple's usual capacity. in short this seems to be a real bras de faire :)
- sfifs 4y ago
  The vast majority of Apple chips are phones, not Macs. Samsung is neck & neck and their top end phones are definitely competitive, performing better in many ways for many people.
- colinmhayes 4y ago
  Apple's chips are better largely because they're the only one on TSMC 5. If apple went to say samsung they'd end up on a worse 5nm process while AMD takes up the 3nm capacity Apple just ditched.
Someone 4y ago
> Enough of the "smaller" players will eventually want and pay for it. At the right price, everybody wants it, but TSMC wants a high price now, to recoup their investment on the new process. If they drop their price now, that will take a long time, and may even be never, as, over time, competition will drive down margins. Apple may be fairly unique in having a “right price” that is a lot higher than that of other players while they also are willing to order hundreds of millions units.
perlgeek 4y ago
> But TSMC can delay 3nm until it has the clients. My impression is that they invested huge sums of money into the 3nm lines; you don't want to delay getting returns on such investments. Considering that capital has a cost, it might be cheaper for them to forego the 6% increase (at least for now) and start returning some of their loans, rather than letting the interest accumulate. (Which Apple knows, of course, which is why they play hardball).