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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.
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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.
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Since they are basically the only manufacturer, when Apple "rejects" the price hike, what options does Apple have?
Same options as TSMC, continue negotiating. They both want this to get worked out.
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> 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?
If you think Apple can just buy their way into fab success, you don't understand the complexities of semiconductor manufacturing.
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The article outlined at least one option that Apple has: stay on the 5nm node for a bit longer. It doesn't seem impossible at all that TSMC would cave/agree to only a 2-3% hike in 6 months. While a greater lead is I'm sure welcome, it's not like Apple isn't _extremely_ well positioned in every market they operate in, even on 5nm.
“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!
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…
Yeah absolutely. Another huge thing I got some window into at Qualcomm is technical validation. So Apple is going to be looking for proof that the chips deliver and TSMC is going to be pushing back against high expectations on that front.
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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.
Shorter-term that's true.
Apple is well known at times to think longer term on logistics, strategy. If push comes to shove, there are two additional options for Apple.
1) Political. Taiwan not being China depends on the support of the US. Apple is a economic security prize for the US, a strategic asset. Apple can get powerful politicians in the US to lean on Taiwan, which can dictate TSMC's behavior to an extent. This would prompt increased compromise from TSMC (3-4% hike, not 6%).
2) Apple starts investing into fabs and builds a TSMC competitor from the ground up, perhaps in alignment with ASML (Europe very much wants an improved semiconductor context) and a few US partners (build the fabs in the US and Europe for national security purposes). Apple is one of the few companies where you have to take this potential seriously, they can safely bankroll it entirely by themselves if necessary.
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>You can actually deduce the vendors that have influence on the big box buyers if you look carefully enough. How? I'm coming up blank. Is there a way to compare prices or quantity against other big box stores?
Look for large big box stores that conspicuously have a product line absent, or only have a very defined subset of the product available. For awhile iPhones were just completely missing from some larger stores, but it seems Apple has the upper hand there now and they're back in business. And even now Apple holds a very right reign on the prices charged (Best Buy seems to have the most leverage here, as they often sel…
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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?
Building your own semiconductor fab with good yelds that are profitable is monumentally more complex than all of those things combined. Why do you think only Intel and Samsung are the ones left at the cutting edge anf even they are struggling to keep up with TSMC? If you think Apple can just buy their way into fab success, you don't understand the complexities of semiconductor manufacturing.
Production of Apple chips by TSMC is not at stack. The price hike concerns the new 3nm process which is apparently costlier than usual. There apparently has been ongoing negotiation for a price hike for a bit which was rumoured to be 3% but seem to actually be 6%. Apple said they weren’t interested at this price point which means they probably won’t use 3nm for their next chips unless a different price agreement can be found.
This is not about Apple changing supplier.