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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%

#81

Post by FartyMcFarter »

concinds wrote: post #78
discordance wrote: post #62

Earlier quoted context omitted.

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

An even better equivalent would be the Apple-Microsoft negotiations in 1997, around Microsoft Office, IE-as-default, non voting shares, etc. I think TechEmails published a bunch of these.

A darker example would be the emails between tech CEOs during the salary fixing scandal:

https://www.vanityfair.com/news/business/2014/04/apple-googl...

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

#82

Post by geodel »

rjzzleep wrote: post #42
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.

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 menti…

Out of those multistep process Apple has done very large part of designing Chip, designing OS to use chip optimally. Apple user market is not the one where they compare Mac with Wintel laptop. They find out M2 is crap in every way compare to Intel or AMD chip and then go on to buy a HP Pavilion or some such.

Besides with Perf/watt gap Mac/Iphone and rest Apple can wait it out for at least a year or maybe even longer.

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

#83

Post by FartyMcFarter »

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?

Clearly there's a level that Apple wouldn't pay (e.g. 100000000% hike), so there are definitely options up to and including cancelling plans to buy such chips from TSMC.

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

#84

Post by adamsmith143 »

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.

That's a massive undertaking. We're talking many years and many billions of dollars and puts Apple too deep into manufacturing I'd think. Not to mention I believe there is a massive wait list for ASML machines that I doubt even Apple could get in front of.

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

#85

Post by adamsmith143 »

mtoner23 wrote: post #12

1. Crazy to me to think apple can't absorb 6% price hike on chips. their margins are usually so high. 2. But its awesome that apple can say no to price hikes. This is good economics for end users and its a reason why capitalism and markets are often good and produce lower prices

> 1. Crazy to me to think apple can't absorb 6% price hike on chips. their margins are usually so high.

What makes you think they'd eat that? Would consumers balk at or even notice a 6% increase in price on their next Iphone? Even if they did Apple could just say "Inflation sry"

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

#86

Post by rjzzleep »

geodel wrote: post #82
rjzzleep wrote: post #42

Earlier quoted context omitted.

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 menti…

Out of those multistep process Apple has done very large part of designing Chip, designing OS to use chip optimally. Apple user market is not the one where they compare Mac with Wintel laptop. They find out M2 is crap in every way compare to Intel or AMD chip and then go on to buy a HP Pavilion or some such. Besides with Perf/watt gap Mac/Iphone and rest Apple can wait it out for at least a year or maybe even longer.

They bought companies that have designed chips for a DECADE, and then that took another decade of experience. And even if Apple went out and bought an old fab or global foundries it will take a decade to build out the capacity with a worsening economic crisis I'm not sure how realistic that is. But sure, it is possible.

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

#87

Post by ethbr0 »

jejeyyy77 wrote: post #52
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.

> Most likely middle managers/directors emailing each other.

Pretty much like sovereign nations negotiating treaties.

Which is an apt metaphor, because neither Apple nor TSMC has the ability to force the other to do anything.

So, negotiations become a crawl to find a mutually-acceptable local optimum. Which ends up with both getting things they see as strategic priorities, while compromising on things they care about less.

Most of the dance is around figuring out what the other's strategic priorities actually are, and which concerns are secondary.

Or they have mutually-exclusove strategic priorities, in which case there is no deal.

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

#88

Post by andreime »

svnt wrote: post #77

My reading of this is that Apple is happy to wait a bit on next-gen given the macro conditions. However if they just admitted that it would be a big hit to image. So instead they are looking to create scapegoats. The most plausible scapegoat is the cutting-edge one with a price hike because there is maximum room for others to speculate on what isn’t right/good enough, and there is minimum risk of giving up their spot…

You think it's possible apple builds a new fab (they have none) and immediately jumps to better than TSMC 5nm?

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

#89

Post by colejohnson66 »

_kbh_ wrote: post #56
cft wrote: post #49

Earlier quoted context omitted.

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.

But Apple needs TSMC. Not saying you’re wrong, but TSMC also has leverage. TSMC doesn’t want to price Apple out, but at the same time, Apple can’t just pack up and go to a competitor. At the nodes they’re working at, going to a competitor could require a complete relayout with new design rules.

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

#90

Post by sfifs »

nspattak wrote: post #67
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.

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…

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.
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