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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%

#191

Post by Perceval »

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

> bring in the US Department of Defense or US government in general

This is a guaranteed route to introducing even more delays, cost overruns, schedule overruns, onerous requirements, intrusive oversight, and about a trillion meetings and studies along the way.

If you want to go fast, stay far far away from the USG.

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

#192

Post by outside1234 »

dylan604 wrote: post #69
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…

Remember that Intel's fabs are waiting in the wings and that I would bet dollars to donuts that Intel is talking with Apple.

TSMC's position in that context is less strong than you'd imagine, especially since Apple has to be thinking that they want to diversify away from Taiwan and China to avoid "Russia risk" of having their supply shut off to zero suddenly when China does something crazy.

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

#193

Post by vineyardmike »

dylan604 wrote: post #69
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…

Apple is famous for pre-buying and covering upfront costs for new node processes at TSMC. TSMC has the best tech, but apple has the biggest purse. Even apple deciding to stay on existing nodes and not fund the latest one can probably affect their finances, especially when apple is 25% of their income

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

#194

Post by scarface74 »

cogman10 wrote: post #184
ras3022 wrote: post #148

Earlier quoted context omitted.

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.

Nvidia just announced they have a glut of unsold inventory. They are the last company that is going to make up the slack.

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

#195

Post by FullyFunctional »

cogman10 wrote: post #184
ras3022 wrote: post #148

Earlier quoted context omitted.

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.

Well, the facts are a little different. Apple is 25% of the volume on the latest nodes and Intel just had an awkward conversation with TSMC saying "Oh, those orders, no, we actually meant the year after", so Apple very much has TSMC "by the balls".

Samsung has produced parts for others for a Very Long Time, most famously NVIDIA (not "nVidia" since many decades) use(d) them.

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

#196

Post by outside1234 »

mirzap wrote: post #124
petesergeant wrote: post #112

Earlier quoted context omitted.

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

I don't think you can just drop a pile of cash and create a competitor to TSMC. Even some state actors can not achieve that. I think TSMC has leverage here, and it will have for long time to come.

Intel is doing exactly this. Apple can sign a second huge deal with them and change the market overnight. TSMC knows this.

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

#197

Post by seafoam »

canjobear wrote: post #183
fckgw wrote: post #170

Earlier quoted context omitted.

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.

Cheaper pickles that taste like vinegar and rubber.

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

#198

Post by ras3022 »

bombcar wrote: post #150
ethbr0 wrote: post #94

Earlier quoted context omitted.

No. It's impossible to trade (even infinite amounts of) money for calendar time or supply access. Any moves Apple made now would wind their way through ASML et al., through fab construction and qualification, and then finally adapting their chips to a new process. They could pull the trigger on the Power to Intel because they'd spent a decade+ of contingency planning, OS/app support, and acquisitions. This isn't like…

Can we be sure Apple hasn't been quietly building a fab or at least fab expertise somewhere in the bowels of Cupertino? Do we have enough insight into ASML to be sure they haven't purchased even older fab equipment?

This is what the TSMC construction site in Arizona looks like.

https://www.bizjournals.com/phoenix/news/2022/05/26/tsmc-pho...

They’re probably not hiding something like that in Cupertino.

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

#199

Post by UncleOxidant »

dylan604 wrote: post #69
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…

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

It wouldn't be easy for Apple to just go to another fab. They'd have to find another vendor with the capacity and then they'd have to tweak things to match the new fab's design rules. Not trivial for something like M* chips. I suspect Intel would be happy to have Apple in their nascent foundry biz, but not sure they would have the capacity right away and also suspect the design would require a good amount of tweaking to get it in production in an Intel fab.

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

#200

Post by vineyardmike »

outside1234 wrote: post #192
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…

Remember that Intel's fabs are waiting in the wings and that I would bet dollars to donuts that Intel is talking with Apple. TSMC's position in that context is less strong than you'd imagine, especially since Apple has to be thinking that they want to diversify away from Taiwan and China to avoid "Russia risk" of having their supply shut off to zero suddenly when China does something crazy.

No way they could switch in under 5 years. TSMC provides design guidance and knowledge that will be deeply embedded in the design of their chips. It’s not like a print shop where you can send over a pdf.

I agree with the diversity angle though. Tim Cook seemed really slow to recognize it, but the last few years apple has accelerated shifting manufacturing. India will now be joining China in producing their latest phones (14), which is a big first.

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