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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%

#61

Post by kube-system »

jbverschoor wrote: post #26
webmobdev wrote: post #9

Apple has more to lose here as they've bet their future on Apple Silicons currently only manufactured at TSMC. So it is interesting to see them still trying to arm-twist TSMC - would love to see their playbook as this is something they are known to do with all their suppliers.

AFAIK TSMC is operating Apple’s machines. If they want, and the contract allows, they can ship the machines somewhere else, and operate them there themselves or with another partner. It’s not like TSMC builds the machines. They just operate them, and we all know what happens to the man in the middle.

Operating them is not a trivial process. The same machines are available to other fabs, but they are behind the capabilities of TSMC.

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

#62

Post by discordance »

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…

There was a post on HN a few days ago showing the negotation emails between Jobs and NewsCorp/James Murdoch:

https://news.ycombinator.com/item?id=5752212

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

#63

Post by onlyrealcuzzo »

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.

Yep, right after they hire about 30,000 people long-term to manufacture the chips, and spend $20B on plants, which would take 5+ years to complete.

It's almost as if TSMC asking or an extra 6% when inflation is at an all-time high is reasonable, and Apple doesn't really have a viable alternative...

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

#64

Post by matwood »

JumpCrisscross wrote: post #55
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.co…

> Apple is cutting back iPhone Pro production [1]

No, iPhone Pro demand is very strong. The regular iPhone demand appears soft or didn't ramp up. None is this is a surprise since early adopters would likely be the same who buy the Pros.

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

#65

Post by cpuguy83 »

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.

I'm not sure I agree it's particularly good leverage since what happens is Apple ends up buying up all of TSMC's production capacity pushing out other customers. There is guaranteed business either way, just Apple is more of a guarantee since they are existing. The other bit is how much Apple invests in TSMC's R&D, which could be a huge loss if Apple moves.

But all this is likely just negotiations and Apple won't be making a move (where to anyway?). Maybe instead of 6% per chip Apple invests a bit more elsewhere in the company to keep production costs as low as possible.

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

#66

Post by The_Colonel »

mschuster91 wrote: post #54
meragrin_ wrote: post #46

Earlier quoted context omitted.

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.

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.

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

#67

Post by nspattak »

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.

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 :)

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

#68

Post by [deleted] »

jhickok wrote: post #47
sofixa wrote: post #33

Earlier quoted context omitted.

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.

[deleted]

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

#69

Post by dylan604 »

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…

Apple: we'll pay no more for this item than ____

TSMC: you'll pay _____ or you can go to the other fab, oh right, you'll pay _____

--------

vendorSellingToBigBox: we would like _____ per unit of our product

bigBoxBuyer: that's nice. we'll pay 40%______ per unit. you'll sell extremelyLargeNumberOfUnits, and make it up in volume. oh, if you don't sell a minimum number, you have to buy all of the unsold items back from us. you'll also get the worst shelf space available compared to your competitors. i'm sorry you thought this was a negotiation.

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

#70

Post by bluGill »

onceiwasthere wrote: post #59

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.

IT is billions of dollars to get a chip fab. I know of several companies that have looked into it (our core competency is manufacturing - why not add chips to the list of things we make and get out of these supply issues..), but the cost to get into it is far too high. Though I suspect some of those companies are regretting the decision over the past 2 years, they could have made the investment back just because we can make those chips you need for a price (to others who can't get needed chips at any price)
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