Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

wccftech.com

Post reply on HN
Print view View original

181–190 of 271 posts

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

#181

Post by sangnoir »

nicoburns wrote: post #167
sangnoir wrote: post #164

Earlier quoted context omitted.

AMD will gladly take that up

They will, but I'd guess they probably won't be willing to pay the higher price either (I believe the only reason Apple has the first batch of N3 capacity in first place is because they outbid the competition). So that likely wouldn't leave TSMC any better off.

> I believe the only reason Apple has the first batch of N3 capacity in first place is because they outbid the competition

There are many more possible reasons why Apple had dibs, including being able to guarantee specific volumes, or committing to pay large non-cancelable amounts as a deposit, and could be as pedestrian as TSMC preferring to deal with a single large order rather than 2 or 3 less large ones as they work out the kinks in a bleeding edge process.

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

#182

Post by mcphage »

necovek wrote: post #35
drexlspivey wrote: post #24

Earlier quoted context omitted.

“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” Kinda crazy to not pay 6% for these gains but that’s just me!

Only if your customers are willing to pay that much. While Apple chips are highly sought after in the West, that's still a minor part of the worldwide market altogether (and while I'd be happy to go back to M1 Max, I couldn't care less for their glossy displays, shallow keyboards and sharp edges — not to mention incomplete Linux support).

> Only if your customers are willing to pay that much.

Yeah, I think they probably are.

> While Apple chips are highly sought after in the West, that's still a minor part of the worldwide market altogether

It is, but it's also the part of the worldwide market that actually makes high profits.

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

#183

Post by canjobear »

fckgw wrote: post #170
AaronFriel wrote: post #154

Earlier quoted context omitted.

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…

I often think about the pickle story about how Wal-Mart can bully companies and their quest for always low prices have ripple effects. https://www.barnesandnoble.com/readouts/the-wal-mart-effect-...

Am I supposed to feel sorry for Vlasic here? The upshot is that I get cheaper pickles.

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

#184

Post by cogman10 »

ras3022 wrote: post #148
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…

There’s no way it’s that simple between Apple and TSMC. Apple also has something TSMC desperately needs too: the ability to pay upfront and guaranteed volume. Turning these lines on and off is basically impossible so guaranteed volume is a way to smooth out demand and is needed for planning. These factories are tremendously expensive and getting cash upfront is basically a zero interest loan in a time of high interes…

The TSMC fabs aren't idling. Between AMD, Intel, nVidia, Broadcom, Google, Amazon, etc. They've got customers with more demands for their chips than they have capacity to provide.

If apple doesn't go to them, I think the only other option is Samsung? But I don't know that Samsung's fabs are open to third parties.

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

#185

Post by s1artibartfast »

alberth wrote: post #139
WastingMyTime89 wrote: post #116

Earlier quoted context omitted.

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 wa…

> I was surprised by how straightforward the whole thing went Executives value their own time over anything else, and as such - they don't find it valuable to haggle over small details in lieu of just getting the deal done.

This has nothing to do with it. It isn't their time that is valuable, it is company time that is valuable.

For example, Apple has 150k+ employees.

A day wasted by the Company is 450 man-years

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

#186

Post by Apocryphon »

cjbgkagh wrote: post #138
madeofpalk wrote: post #96

Earlier quoted context omitted.

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

The conspiracy theorist in me wonders if they’ll join a secret lobby agitating for war between China and Taiwan, if Apple can’t get 6% off TMSC then no-one can. Then build a US based plant subsidized with taxpayer money.

A futuristic, high-tech variant of how Nestlé, United Fruit, and Dole use(d) gunboat diplomacy to create banana republics.

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

#187

Post by doikor »

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.

> AFAIK TSMC is operating Apple’s machines.

Nah they are TSMC's machines. Really expensive ones. Apple just has bought the production of certain fab before they are built for certain amount of wavers (or time?) for X amount of money. Now TSMC is saying that due to inflation that X needs to be made bigger and thus renegotiating the contracts.

(Also this paying upfront is really good for TSMC as they basically get interest free loan for building the fab)

Also I think there is misconception that you could just buy a EUV lithography machines from ASML and start making chips. That is just one part (a very expensive hundreds of millions costing part) of a multistep process to make a modern microprocessor. In general it takes 3 to 4 months to go from a bare silicon wafer to a packaged chip. This is also why losing power/contamination can be really costly at a semiconductor fab as you can lose 1/4 to 1/3 of a years total production capacity even if you get the fab back to running next week.

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

#188

Post by perlgeek »

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.

> But TSMC can delay 3nm until it has the clients.

My impression is that they invested huge sums of money into the 3nm lines; you don't want to delay getting returns on such investments.

Considering that capital has a cost, it might be cheaper for them to forego the 6% increase (at least for now) and start returning some of their loans, rather than letting the interest accumulate. (Which Apple knows, of course, which is why they play hardball).

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

#189

Post by ras3022 »

cjbgkagh wrote: post #138
madeofpalk wrote: post #96

Earlier quoted context omitted.

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

The conspiracy theorist in me wonders if they’ll join a secret lobby agitating for war between China and Taiwan, if Apple can’t get 6% off TMSC then no-one can. Then build a US based plant subsidized with taxpayer money.

In that scenario how does Apple source all the parts made in China? They would be better off paying the 6%

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

#190

Post by sangnoir »

moonchrome wrote: post #175
sangnoir wrote: post #165

Earlier quoted context omitted.

TSMC is not hurting for cash and can easily shoulder the risks - or sell bonds if they'd like prefer to keep the warchest full. There is a long list of customers who'd kill for a chance to get (additional) capacity of the leading edge node process for years at a time (AMD, Nvidia, Google, Amazon, and the rest of the companies giving TSMC the other 75% of revenue)

> There is a long list of customers who'd kill for a chance to get (additional) capacity of the leading edge node process for years at a time Is there? Seems like we're heading for a recession and reduced demand - at higher prices I wouldn't be surprised existing customers cut back on existing capacity.

> Is there? Seems like we're heading for a recession and reduced demand

Perhaps lower demand for consumer devices[1], but at Google and Amazon's scale, getting more efficient Tensor cores, ARM processors, and AI accelerators for their respective clouds will save them some OpEx by requiring less power (and cooling). It may also save CapEx as well, by reducing the need to build additional datacenters by getting +10% more compute[2] with the existing DC footprint, power and cooling budgets.

Server costs are amortized over long periods - longer than whatever recession may or may not happen. Also, if they can lock-in TSMC for years, they'll continue to reap benefits long after the recession is over and shift capacity to Kindles or Pixel devices when consumer demand recovers.

1. Which may explain Apple developing cold feet.

2. Back of envelope calculations. I do not know what node mixes Google and Amazon have in their data centers, but I'm guessing it averages-out between 10 to 15nm. How much can they benefit by replacing their oldest processors with 3nm parts?

Post reply on HN