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

wccftech.com

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

#51

Post by duxup »

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…

Yeah the scale of complexity in these deals must be way way beyond the sticker price.

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

#52

Post by jejeyyy77 »

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…

Probably a lot less interesting than it seems because it's not like Tim Cook comes into a board room to negotiate.

Most likely middle managers/directors emailing each other.

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

#53

Post by duxup »

cft wrote: post #49
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?

Same options as TSMC, continue negotiating.

They both want this to get worked out.

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

#54

Post by mschuster91 »

meragrin_ wrote: post #46
nspattak wrote: post #8

Earlier quoted context omitted.

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.

> 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.

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

#55

Post by JumpCrisscross »

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?

> charging 6% more for the 3nm process seems reasonable

I imagine the negotiations largely centre around timeline and quantity guarantees, as well as capability. Apple is cutting back iPhone Pro production [1]. If 3nm won't enable features that sell more iPhones, or if the market is shifting from a feature focus to one on costs, 6% more for 3nm may make sticking with five more profitable.

[1] https://www.bloomberg.com/news/articles/2022-09-28/apple-iph...

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

#56

Post by _kbh_ »

cft wrote: post #49
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?

Considering Apple funds a lot of TSMC's R&D I dare say they have a lot of leverage if they really wanna push it.

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

#57

Post by doikor »

meragrin_ wrote: post #46
nspattak wrote: post #8

Earlier quoted context omitted.

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.

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.

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

#59

Post by onceiwasthere »

Being almost completely uninformed on the details of Apple/TSMC's dealings, I'm curious, would Apple ever position themselves to get into chip fabrication? I'm sure there are big reasons this is unlikely but it seems like if anyone could do it, it's Apple.

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

#60

Post by fundad »

boringg wrote: post #37

6% rate hike is pretty high especially as I've read recently a lot of the inflation costs have actually gone back into corporate profits instead of inflated products costs / labor costs. Add in high cost of USD on global markets. Interesting scenario with both parties squaring off.

Exactly, The whole story has been “we tried for higher prices and this time we got ‘em!” Not gettin em this time.
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