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Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%

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Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%

#41

Post by lotsofpulp »

LatteLazy wrote: post #27

Is there a special name for situations where you have only one or very buyers AND sellers at the same time? Like a combination of monopoly and monopsony power? I wonder how prices are discovered in situations like these?

> I wonder how prices are discovered in situations like these?

You are reading about it! If a deal is met, the supply and demand curves presumably intersect, and a price is discovered.

Of course, with extremely low volume of deals and extremely high complexity, the risk of miscalculation and loss for either party is high. Apple overpaying and their customers not willing to pay, or TSMC underpricing and not being able to cover their costs of production to deliver the goods qt the agreed upon specifications. This is also a loss for Apple, since having a functional TSMC is the ideal, not forcing them to go out of business.

Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%

#42

Post by rjzzleep »

robin_reala wrote: post #13
alphabetting wrote: post #7

TSMC charging 6% more for the 3nm process seems reasonable. Article notes Apple accounts for 25% of their revenue and says this gives them leverage over TSMC but aren't they the only 3nm player in town?

Yep, but TSMC don’t manufacture the main lithography machines: that’s typically solely or at least collaboratively from ASML in the Netherlands. So if Apple really wanted to, they could move gradually away. And given their volumes, this is leverage.

Uh it's not that easy at all? This is a decade worth of work right there. European manufacturers also don't really have big quantity manufacturing. SMIC has been moving gradually towards lower nm fabs. It's odd that people here nowadays think, oh you just get better lithography and we're done. This a multistep process to begin with. Do you think Intels only problem is that they can't buy ASML components? Not to mention that all European manufacturing "giants"(in demand and importance not in volume) like ASML have quite limited capacity. During Covid there was a shortage of machines that produce fibres needed to create N95 masks for example.

Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%

#45

Post by [deleted] »

robin_reala wrote: post #13
alphabetting wrote: post #7

TSMC charging 6% more for the 3nm process seems reasonable. Article notes Apple accounts for 25% of their revenue and says this gives them leverage over TSMC but aren't they the only 3nm player in town?

Yep, but TSMC don’t manufacture the main lithography machines: that’s typically solely or at least collaboratively from ASML in the Netherlands. So if Apple really wanted to, they could move gradually away. And given their volumes, this is leverage.

[deleted]

Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%

#46

Post by meragrin_ »

nspattak wrote: post #8
e3bc54b2 wrote: post #4

Earlier quoted context omitted.

They're probably both flexing. TSMC is so valuable because Apple's reserved high end high volume orders allows them to expand capacity, Apple probably also is a tester for new tech. They'll both come to terms in some middle ground. Apple has history of such flexing to force other parties to play nice.

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

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.

Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%

#47

Post by jhickok »

sofixa wrote: post #33
robin_reala wrote: post #13

Earlier quoted context omitted.

Yep, but TSMC don’t manufacture the main lithography machines: that’s typically solely or at least collaboratively from ASML in the Netherlands. So if Apple really wanted to, they could move gradually away. And given their volumes, this is leverage.

That would probably take years to set up, and considering Apple outsource manufacturing in general (Foxconn for assembly, Samsung for screens, TSMC for chips) it wouldn't necessarily fit their modus operandi. On the other hand they have more money than they could possibly spend, so insourcing everything for vertical integration isn't out of reach.

I also just think Apple has planned for these contingencies which prevents them from having no way out of TSMC. Tim Cook is a supply chain genius and no way do they sabre rattle without a realistic, even if slightly painful, second option.

Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%

#48

Post by phkahler »

jimnotgym wrote: post #11
alphabetting wrote: post #7

TSMC charging 6% more for the 3nm process seems reasonable. Article notes Apple accounts for 25% of their revenue and says this gives them leverage over TSMC but aren't they the only 3nm player in town?

That was my thought. Can't they just threaten to sell the space to someone else?

>> Can't they just threaten to sell the space to someone else?

You mean TSMC threaten? The only other huge players willing to pay a premium for state of the art node like that are GPUs, and they just got the whole crypto mining rug pulled out from under them so they may not be interested in paying top dollar any more.

Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%

#49

Post by cft »

atonse wrote: post #6

I'd love to be a fly on the wall during these negotiations. Just to see what the heck they even talk about, what information each party comes armed with, and what kinds of concessions get offered. I mean it isn't just a "we'll lower this" I bet there's lots of juicy confidential future roadmap stuff, things like "Ok we'll help you invest in this _____ tech and machinery but you have to knock off half a cent" or who k…

Since they are basically the only manufacturer, when Apple "rejects" the price hike, what options does Apple have?

Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%

#50

Post by JumpCrisscross »

sofixa wrote: post #33
robin_reala wrote: post #13

Earlier quoted context omitted.

Yep, but TSMC don’t manufacture the main lithography machines: that’s typically solely or at least collaboratively from ASML in the Netherlands. So if Apple really wanted to, they could move gradually away. And given their volumes, this is leverage.

That would probably take years to set up, and considering Apple outsource manufacturing in general (Foxconn for assembly, Samsung for screens, TSMC for chips) it wouldn't necessarily fit their modus operandi. On the other hand they have more money than they could possibly spend, so insourcing everything for vertical integration isn't out of reach.

> would probably take years to set up

Even posturing to begin that process would knock tens of billions off TSMC's market cap and spike its funding costs, to say nothing about complicating its contract negotiations with every other customer. They did it, after all, to Intel.

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