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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%

#151

Post by TillE »

bombcar wrote: post #95
Sakos wrote: post #72

Earlier quoted context omitted.

Honestly, I'm surprised they haven't started yet. If TSMC puts up too much of a fight, they might start internally considering how they would get into chip fabrication. They've already done everything else to great success (and to much surprise), so while the problem seems insurmountable, maybe Apple would be able to do what nobody else has been able to do in decades (aside from the Chinese with significant state inv…

If Apple isn't at least working on how to bring chip manufacturing in-house I'd be incredibly surprised. They have $48 billion in cash on hand, they at least have worked out a plan on how they would do it if needed.

It's risky because if they do it, they have to consistently be as good or better than TSMC, year after year. Makes more sense than trying to build a car though.

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

#152

Post by sbaiddn »

bombcar wrote: post #140
dylan604 wrote: post #69

Earlier quoted context omitted.

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…

You can actually deduce the vendors that have influence on the big box buyers if you look carefully enough. And some of the vendors will tell Walmart/Costco to take an airborne intercourse course against rolling pastries. Others will sell a white-label or generic brand to them. After all, it's just business.

"take an airborne intercourse course against rolling pastries"

Ill have to steal that one

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

#153

Post by bombcar »

MobiusHorizons wrote: post #134
adamsmith143 wrote: post #80

Earlier quoted context omitted.

>By the time competition is up on it, Apple can return to their most familiar location: somewhat behind on the bleeding edge of tech, but ahead on integration and UX. Seems like a good tradeoff. Is the next years best TSMC chip really that much better than last year's? I doubt it.

From TSMCs marketing material > N3 technology will offer up to 70% logic density gain, up to 15% speed improvement at the same power and up to 30% power reduction at the same speed as compared with N5 technology. That is a more modest bump than some previous nodes, but still seems worth a 6% increase in price depending on how yields shake out.

All those "up tos" can sometimes add up to "actually not much".

And if Apple is currently a "generation ahead" they can spend that lead-time in other ways. They've done it before out of necessity, and I wouldn't be surprised if Apple has phone features they're holding back to "gloss over" a release that doesn't really have much more CPU.

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

#154

Post by AaronFriel »

plasticchris wrote: post #142
dylan604 wrote: post #69

Earlier quoted context omitted.

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…

It can get worse. At one point Walmart mispriced a product then came after my company for the loss. That was an awkward moment. Edit: even worse, now customers expect the lower price, eroding your pricing power.

Walmart will also do this intentionally to their vendors, or engage in what I call temporal arbitrage.

It hurts Walmart as a business very little to stop selling Vendor X goods on their shelves when there are substitutes available. However, for Vendor X it's often the case that Vendor X cannot adjust their output as quickly as Walmart can take the product off shelves. That action, taking them off the shelves for even a short period of time while Walmart presses for renegotiating terms can result in layoffs, loss of revenue could result in lines of credit drying up. It's an existential threat to a company because they can't scale up and down at the speed Walmart demands.

If I recall correctly there's a record of this happening with Rubbermaid, and they responded to Walmart's demands for prices by cutting costs, cutting corners with quality, and ultimately sullied their brand name.

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

#155

Post by sangnoir »

AngryData wrote: post #130
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?

Nothing immediately, but they have the cash on hand to fund competitors now that could replace them in say 10 years or so.

How is this approach working out for China? Not snark, I genuinely want to know what resident experts think of the progress made by throwing vast sums at SoTA node fabs.

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

#156

Post by ClumsyPilot »

phkahler wrote: post #48
jimnotgym wrote: post #11

Earlier quoted context omitted.

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.

There are always people who spend tip dollar on latest GPU to play rayteacing doom in 8K 120 HZ. Or run stable diffusion

Quantity varies though.

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

#157

Post by ChrisMarshallNY »

nyokodo wrote: post #98
colejohnson66 wrote: post #89

Earlier quoted context omitted.

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.

> Apple can’t just pack up and go to a competitor No, but they can use their massive war chest and expertise to ramp up a competitor or become one themselves over the next decade or two. With massive corporate ships like TSMC and Apple it takes a long time to change course but they work on longer timelines so a big negative shift over a long time scale is an alarming signal.

If anyone can do it, it's Apple.

Remember when there was no way that Apple would ever be able to move away from Moto?

Remember when there was no way that Apple would ever be able to move away from IBM/Power?

Remember when there was no way that Apple would ever be able to move away from Intel?

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

#158

Post by dotnet00 »

Maursault wrote: post #127
ren_engineer wrote: post #97

Earlier quoted context omitted.

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

> The only real option Apple would have... TSMC has a market cap of $356B and maybe $30B in cash. Apple has a market cap of $3.25T and over $200B in cash. Surely you are overlooking a possible option here, which is Apple acquiring TSMC. I don't see it as likely, but it is an option.

I really doubt that would be allowed to go through due to the conflicting interests it would create regarding chips produced for all other competitors (AMD, Google, Qualcomm etc). It would be seen as similar to the NVIDIA buyout of ARM.

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

#159

Post by bombcar »

TillE wrote: post #151
bombcar wrote: post #95

Earlier quoted context omitted.

If Apple isn't at least working on how to bring chip manufacturing in-house I'd be incredibly surprised. They have $48 billion in cash on hand, they at least have worked out a plan on how they would do it if needed.

It's risky because if they do it, they have to consistently be as good or better than TSMC, year after year. Makes more sense than trying to build a car though.

They only have to be "good enough" with some wins, Apple was able to survive the mediocre Intel performance and likely could survive some mediocre iPhone chip performance.

But they won't do it unless they need to, or they think they can get a major win, and even then likely though a subsidiary.

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

#160

Post by Joeri »

2OEH8eoCRo0 wrote: post #135
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?

> Apple accounts for 25% of their revenue Isn't this misleading? If Apple doesn't take the fab capacity then somebody else will.

But will they keep taking that fab capacity over many years and fund the R&D of the next process nodes by buying up guaranteed capacity ahead of time? Apple has been a good partner to TSMC and it would not be wise to replace them for short term gain.
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