5 ms·
TSMC should be charging NVDA much more
by beggi 2y ago
TSMC should be charging NVDA much more
- nabla9 2y agowoulda, coulda, shoulda After Apple, Nvidia pays more than anyone else for the latest nodes. They reserved capacity for a price and they get it for that price.
- TheAlchemist 2y agoWhy it's not happening ? For the first quarters after AI exploded, I thought it was just that contracts were already signed, but what's stopping them now ?
- nabla9 2y agoBecause Nvidia can say no and nobody else (except Apple) is willing to pay more for the latest node.
- tedunangst 2y agoLike an auction where you pay the second highest bid.
- TheAlchemist 2y agoCan really Nvidia say no ? They are making 78% of margin on those chips - I would think that that leaves a lot of bargaining power to TSMC. They would loose much less than Nvidia.
- nabla9 2y agoYou can't do shakedowns for your second best customer. Nvidia works also with Samsung for new 3nm nodes. Prices are defined by the profit margins of Nvidia's closest competitor (AMD 4.89%.)
- TheAlchemist 2y agoWhy not ? Nvidia may be working with Samsung, but they don't have any alternative for now. So my understanding is, that TSMC currently has the monopoly on producing Nvidia chips, and Nvidia obviously has the monopoly on selling those chips. And somehow, Nvidia is extracting 99% of profits from that situation, while TSMC is getting close to nothing. My understanding of game theory is that it should be way closer to an even split. Could you elaborate on why the prices are defined by AMD margins ? I'm obviously missing something, but can't see what.
- purple_ferret 2y ago>You can't do shakedowns for your second best customer. Except Nvidia is shaking down its best, second best, and all the rest of their customers!
- acchow 2y agoNvidia can only say no if they have another shop to turn to. Do they?
- mewpmewp2 2y agoThe way that could play out is that Nvidia wouldn't buy directly from them, but somebody else purchases cheaper from TSMC and then Nvidia buys from them. So TSMC would have to increase prices for everyone, but then for some it would be too expensive and so they would lose those customers.
- nabla9 2y agoThat's not how it works. You can't resell. Nvidia engineers work shoulder to shoulder with TSMC to squeeze everything from the architecture even before the fab is build. TSMC makes custom job for their best customers. For old established process it's possible to send design and get functioning chips without a huge R&D hassle and loss of performance.
- nabla9 2y agoThey have. Samsung is competing for Nvidia orders with their 3nm node.
- HDThoreaun 2y agoSecond price auctions are the efficient way to allocate supply in a monopoly.