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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%

#111

Post by yellow_lead »

ethbr0 wrote: post #87
jejeyyy77 wrote: post #52

Earlier quoted context omitted.

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…

"strategic priorities" or "Something that can make me look good" to an executive

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

#112

Post by petesergeant »

madeofpalk wrote: post #96
_kbh_ wrote: post #56

Earlier quoted context omitted.

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.

It appears they both equally need each other. If TMSC rejects Apple, what is Apple going to do? Use Intel chips in iPhones?

Say "OK, for now!", and then drop some of its gigantic cash pile into helping another supplier that it part-owns become a real competitor

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

#113

Post by [deleted] »

Scoundreller wrote: post #109
JumpCrisscross wrote: post #55

Earlier quoted context omitted.

> 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…

Any decrease in the photolithographic process size decreases power consumption (and reliability, electromigration for the win!)

[deleted]

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

#114

Post by derbOac »

ren_engineer wrote: post #97
andreime wrote: post #88

Earlier quoted context omitted.

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

fabs take years to build. The only real option Apple would have is some kind of joint venture with Intel and maybe try to bring in the US Department of Defense or US government in general to push the whole chip national security talking point and get more funding

Well, I think that's their leverage (if they have any). They kick the can, wait, take the hit, and then in the meantime make it clear that next time they'll have their own fab. In that scenario TSMC is looking at demanding a 6% hike vs jumpstarting competitors in other countries.

Maybe it's unrealistic but it wouldn't be the first time something like that happened in a market. The political conditions aren't unfavorable either.

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

#115

Post by adam_arthur »

mrweasel wrote: post #107
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.

My thinking is that Apple is also the only customer that could fund the development of a competitor. I doubt that Apple would want to run their own fab, but they could help fund the development of 3nm at either GlobalFoundries or Intel.

Yes, surely that costs less than a 6% price hike

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

#116

Post by WastingMyTime89 »

discordance wrote: post #62
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

Murdoch e-mails are nice in that they nicely highlight the multiple fronts nature of negotiating where you can often find compromise by shifting how you approach the problem.

The way Jobs closes it is quite unusual however because in this case NewsCorp were late movers. Apple had already reached terms with all their competitors and could put on the table a take it or leave it offer which Murdoch couldn’t refuse.

I was part of the team in charge on negotiating the termination of an on-going contract involving a potential settlement in the low teens millions of dollars between two huge industrial companies once. Obviously it’s nothing as big as a deal between Apple and TSMC but still not an insignificant sum.

I was surprised by how straightforward the whole thing went. Basically we had prepared our arguments: we knew the minimum payment we could justify, the maximum we thought the contract allowed them to ask, what we were aiming for and how much we estimated going to court would cost us and them. They had done the same. There were a couple of back and forth where one party made an offer, the other countered with another one explaining why what was asked didn’t apply and why it should rather be like so and so. At some point, we said that’s our last offer we won’t move anymore. They decided to agree and that was it.

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

#117

Post by jaywalk »

matwood wrote: post #64
JumpCrisscross wrote: post #55

Earlier quoted context omitted.

> 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.

I think the iPhone 14 Plus was a huge miss for them. Anyone who wants a bigger phone probably also wants the Pro. Wouldn't be surprised if there is no iPhone 15 Plus.

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

#118

Post by mhb »

onlyrealcuzzo wrote: post #63
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.

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...

Maybe Apple is looking for a way to get rid of some of its cash before inflation eats away more of it.

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

#119

Post by Hamuko »

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?

Ask what kind of tax breaks the US government would be willing to give them if they were to build a foundry in the US.

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

#120

Post by colinmhayes »

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…

Apple's chips are better largely because they're the only one on TSMC 5. If apple went to say samsung they'd end up on a worse 5nm process while AMD takes up the 3nm capacity Apple just ditched.
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