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TSMC warns over deepening slump in chipmaking sector

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Re: TSMC warns over deepening slump in chipmaking sector

#81

Post by mrDmrTmrJ »

sumtechguy wrote: post #70
jrockway wrote: post #22

Earlier quoted context omitted.

I don't think that's true. If my BOM costs go down by 10%, I don't need to charge any less money for my product. If Apple could build an iPhone for 1 cent, why wouldn't they still charge $1000 for it? They can say it's how much iOS costs or whatever. (And hey, use the extra profit to hire more tax-paying iOS developers, making iOS even more valuable.)

In economics the closer you get your price to be MR=MC the better off your profit. If they did as you said more than likely they would be leaving money on the table. This is usually a fairly common intro economics problem as it can seem unintuitive to lower the price to make more profit. Now iPhones do have somewhat of a 'monopoly' effect. But only to a point. In a monopoly you want MC=MD. https://openstax.org/books/…

Respectively, plenty of companies can build a smartphone for far, FAR less than the sale price of an iPhone. E.g. a $50-$130 Samsung Galaxy A03.

It's Apples install base, app ecosystem, and social moat (iMessage) allows continued high gross margins on their hardware and locks competition away from their profit center. The sale price has very little to do with the marginal cost of production and a ton to do with a naturally occuring software monopoly.

Re: TSMC warns over deepening slump in chipmaking sector

#82

Post by drcode »

andy_ppp wrote: post #51

How can this be happening with an AI revolution needing an almost infinite supply of high end graphics cards?

Near as I can tell, because of the nature of the chip business, there is a limit on how fast they can pivot production towards a market segment that is seeing increasing demand (in this case, the AI chip business)

So even assuming that there theoretically are enough purchasers of AI chips available to offset their other lost demand, it will take a year or two before they can fully serve these new customers and collect this revenue.

Re: TSMC warns over deepening slump in chipmaking sector

#83

Post by AYBABTME »

A year+ ago, the same folks were talking about the incoming switch from under supply to over supply, and the predictable outcome that we see today. None of those involved are surprised by this on the macro level, but when they put their short-term glasses on for the purpose of quarter-to-quarter reporting, they say stuff like "deeper slump than expected". Obviously at the end of the day, these folks are sleeping just fine, knowing and having expected this with >12m of warning.

Re: TSMC warns over deepening slump in chipmaking sector

#84

Post by AYBABTME »

bradleyjg wrote: post #12
christkv wrote: post #7

Good hopefully the prices will slide back towards pre pandemic levels making it more affordable for people

Houses too …

If anything, houses are going to stagnate until inflation catch up. No politician will want to sit in office while overseeing a nation-wide collapse of property value, this would tear the fabric of society too much. People can stomach making a stagnating investment, but they can't stomach making an investment that loses value, especially not when the investment is touted as a no-brainer and basic life goal investment by everyone (the American Dream).

Re: TSMC warns over deepening slump in chipmaking sector

#85

Post by andy_ppp »

drcode wrote: post #82
andy_ppp wrote: post #51

How can this be happening with an AI revolution needing an almost infinite supply of high end graphics cards?

Near as I can tell, because of the nature of the chip business, there is a limit on how fast they can pivot production towards a market segment that is seeing increasing demand (in this case, the AI chip business) So even assuming that there theoretically are enough purchasers of AI chips available to offset their other lost demand, it will take a year or two before they can fully serve these new customers and collec…

Yeah I was thinking something along the lines of, we have factories setup to produce AMD CPUs on 4nm for 6 months, another setup for Apple etc. and if say Apple reduces its demand TSMC can’t magically turn the AMD or Apple (etc.) setups into Nvidia GPUs that quickly. Also NVidia probably benefits from some scarcity so it might not be worth their while to order more?

Re: TSMC warns over deepening slump in chipmaking sector

#86

Post by gargablegar »

cs702 wrote: post #17

TSMC just warned the world of a 10% decline in chip revenues. Given that chips today are critical component of every phone, TV, laptop, desktop PC, server, vehicle, dishwasher, and pretty much everything else , TSMC's warning suggests we're going to experience a significant global economic contraction soon. Hopefully I'm wrong.

We have been seeing a significant global contraction for the last year lol. It’s still going.

We just all riding on the post covid backlog and over order.

Re: TSMC warns over deepening slump in chipmaking sector

#87

Post by paulmd »

tylerfontaine wrote: post #74
adventured wrote: post #53

Earlier quoted context omitted.

Assembling a new home PC, picked up a 2tb Samsung 980 Pro with a heatsink recently for $129 (I think it was $113 without the heatsink at that moment). DDR5 ram is finally starting to get price reasonable as well.

I got a 2TB 980 pro with heat sink from Bestbuy last week for $99. I was astounded. No brainer upgrade for the PS5

be sure to upgrade the firmware, 980 pros are known to die after a while.

dunno why people keep paying this premium for them, there's other better options for less money, like HP FX900 or Team Cardea these days. And those companies have a track record of reliability and not... whatever Samsung is doing for the last 10 years.

Like honestly these days Samsung rates below stuff like Sabrent Rocket for me. You're better off picking a random other product from a big-name brand with equivalent specs as long as it's not a Samsung... the "SSD monty hall problem" if you will. Simply by switching, you improve your odds.

Re: TSMC warns over deepening slump in chipmaking sector

#88

Post by jrockway »

pdonis wrote: post #75
adventured wrote: post #48

Earlier quoted context omitted.

> Cause in healthy capitalism, a competitor could step in and sell it for $999 and Apple would lose market share quickly. No they can't. You're neglecting the various moats that an entity like Apple enjoys with the iPhone. First you have to be able to actually build a similar or superior product. You can't do it. Elite of elite tech engineering companies like Samsung can just barely keep up generation after generatio…

> You're neglecting the various moats that an entity like Apple enjoys with the iPhone. A world in which Apple could build iPhones for 1 cent would be a world in which those moats did not exist.

Why? How does the cost of microprocessors and metals decreasing make programming easier?

Re: TSMC warns over deepening slump in chipmaking sector

#89

Post by sanxiyn »

ajross wrote: post #43
cs702 wrote: post #17

TSMC just warned the world of a 10% decline in chip revenues. Given that chips today are critical component of every phone, TV, laptop, desktop PC, server, vehicle, dishwasher, and pretty much everything else , TSMC's warning suggests we're going to experience a significant global economic contraction soon. Hopefully I'm wrong.

> Given that [...] we're going to experience a significant global economic contraction soon. What's with all the doomslinging in modern discourse? No, no, that's not now it works at all. There was a chip shortage just a year ago! Did that plunge us into recession? No, clearly it didn't. Then it was Inflation that was going to kill us all. And it didn't either. Now all of a sudden we're swinging the other way with chi…

Well, inflation is an actual danger (see Turkey) and Federal Reserve deserves credit for handling inflation well.

I agree semiconductor is an industry well known to be cyclic and prophecies of doom are ridiculous.

Re: TSMC warns over deepening slump in chipmaking sector

#90

Post by fshbbdssbbgdd »

mrDmrTmrJ wrote: post #81
sumtechguy wrote: post #70

Earlier quoted context omitted.

In economics the closer you get your price to be MR=MC the better off your profit. If they did as you said more than likely they would be leaving money on the table. This is usually a fairly common intro economics problem as it can seem unintuitive to lower the price to make more profit. Now iPhones do have somewhat of a 'monopoly' effect. But only to a point. In a monopoly you want MC=MD. https://openstax.org/books/…

Respectively, plenty of companies can build a smartphone for far, FAR less than the sale price of an iPhone. E.g. a $50-$130 Samsung Galaxy A03. It's Apples install base, app ecosystem, and social moat (iMessage) allows continued high gross margins on their hardware and locks competition away from their profit center. The sale price has very little to do with the marginal cost of production and a ton to do with a nat…

That Samsung uses the 12nm node, so you could say it falls somewhere between iPhone 7 (16nm) and iPhone (10nm). Those are worth about $100 used. A lot of the cost of manufacturing cost of cellphone parts comes from upfront capital expense, which is paid off by new models. This allows a strategy of selling cheaper, lower-end models using that old equipment.

Apple also pursues this strategy, but they don’t push it nearly as far as Samsung. The cheapest iPhone, the SE 3 at $430, has a 5 nm chip in it, which they only released two years ago. Apple just isn’t willing to release a parts-bin device, because they have a high quality bar. This is part of a moneymaking strategy, but my point is you can’t compare the A03 price to any current iPhone model.

Apple’s hardware margin is 35%, that is a reasonable estimate of the premium Apple is charging over a totally generic phone.

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