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Apple is America's semiconductor problem

semiconductor-digest.com

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Re: Apple is America's semiconductor problem

#101

Post by necovek »

htk wrote: post #82

Terrible article, as expected from Matt Stoller. "With this position, Apple uses its outsized buying power to squeeze the margins of its suppliers such as Foxconn, leading to poor pay and terrible working conditions in Chinese factories." So Foxconn is either choosing to not do business with Apple's competitors who would pay more (??), or the competitors can't place orders of the magnitude that Apple can and Foxconn…

The article is certainly somewhat incoherent.

But there's a hint of dishonesty in your retort too: obviously, there are competitors who would pay more (and they are paying more elsewhere, since their margins are so much smaller than Apple's), but for much smaller quantities of production. A supplier like Foxconn can't afford to lose a customer like Apple because they were already selling their services cheap with low margins. Apple is basically squeezing them ever more — instead of growing business needs leading to improved conditions for employees, Foxconn is forced to provide more for less because Apple can demand that "or else".

I am not saying this is true, but this line of thinking is still obvious just from the short quote you posted.

Re: Apple is America's semiconductor problem

#102

Post by kergonath »

Barrin92 wrote: post #87
causal wrote: post #46

Earlier quoted context omitted.

Yeah I'm a little confused by the premise. How would reshoring chip production be easier if Apple weren't out there buying chips? I get that they are buying up all of the TSMC chips in some segments. Doesn't that just create demand for an alternative? I can't cohere the themes of this article.

>How would reshoring chip production be easier if Apple weren't out there buying chips? Because Apple's dominant position as a monopsonist means it has price setting power and depresses the profits in the chip industry, making all but the cheapest locations effectively unsustainable. Monopsonists essentially absorb the profits of their suppliers. This is for example why nationalized health services are cheap.

This does not sound like a complete picture. Apple might depress the prices for themselves, but not for other fab customers. On the contrary, if there is a supply issue, with one customer getting all the production, then prices should go up overall, helping competing fabs. In a situation with a huge production shortfall, it becomes a matter of initial capital, with which governments can help effectively (either with subsidies or with tax incentives). If the customers are there and demand is strong, eventual RoI should be ok.

In your example, not only has the government huge bargaining power, but the law itself limits other customers, and this there is no demand outside of the government. In contrast, there are plenty of customers for semiconductors. Demand is still here.

So yes, Apple might reduce TSMC’s margin, but the real problem is not that. It’s that there is nobody else operating on the same scale. The fact that there is no alternative for cutting edge nodes is a sign of a market failure.

Besides, this “it’s Apple fault and they depress margins” sounds disingenuous. Apple famously invested quite a lot in TSMC’s fabs in exchange for this access to the latest nodes. And TSMC also benefits from stable, predictable demand. The real problem is the spectacular failure of Intel and the complete lack of effectiveness of the handful of governments that could do something. Things seem to be changing, even if it is slow, but we should never have been in that situation in the first place.

Re: Apple is America's semiconductor problem

#103

Post by alephnerd »

pessimizer wrote: post #100
alephnerd wrote: post #71

Earlier quoted context omitted.

> I feel like I'm getting trolled by the author Because it's Matt Stoller. I've commented (with citations) enough on HN about Stoller's biases and issues around analysis [0][1] He's upped his content publishing the past few months now that he is competing with Oren Cass to change mindshare and build a prominent profile, but Cass is a Romney protege so he's limited. If Trump becomes president, Stoller is most likely g…

Let me get this straight: the "close relationship to JD Vance" is that he wrote an article that mentioned that Vance said something nice about Lina Khan, and this article means that Trump will "most likely" fire Lina Khan and hire Matt Stoller?

That article is one of the several engagements he's been putting on recently in the right-sphere.

His most damning quote was from 2023 that “fundamentally, my view is that authoritarianism is coming from the private sector,” not from those who’d attempt to seize control of democratic institutions by force. [0]

> Trump will "most likely" fire Lina Khan and hire Matt Stoller

He doesn't need to fire Lina Khan (though he most likely would) because Melissa Holyoak's term is expiring in 2025

[0] - https://www.politico.com/news/magazine/2023/04/21/matt-stoll...

Re: Apple is America's semiconductor problem

#104

Post by Jtsummers »

iamacyborg wrote: post #93
jocaal wrote: post #61

Earlier quoted context omitted.

> But I find an article that doesn't even address any other companies a little hard to swallow. Are other companies simply not able to "reshore" chip fabs? I urge you to look at the earnings of some of the most popular chip manufacturers and then look at the earnings of apple (also ignore nvidia as it is an obvious outlier). Creating a modern chip fab takes A LOT of money and is simply impossible when some of the mos…

> Also it would be quite scary if apple is allowed that type of vertical integration. Scary in what way?

It wouldn't be. People are just afraid of vertical integration because they equate it to vertical monopolies, when the fact of vertical integration does not itself mean that there is a vertical monopoly.

Re: Apple is America's semiconductor problem

#105

Post by gruez »

p1necone wrote: post #68
asdasdsddd wrote: post #59

> Apple buys a far larger share of smartphone and computer semiconductors, given that it accounts for half of global smartphones sales and earns 85% of all smartphones I feel like I'm getting trolled by the author who is citing sales and profits instead of units produced as a metric.

I imagine sales numbers and profits are publicly available information, whereas actual # of units produced is likely not an easy number to find?

>whereas actual # of units produced is likely not an easy number to find?

"Global Smartphone Shipments (Millions)"

https://www.counterpointresearch.com/insights/global-smartph...

Re: Apple is America's semiconductor problem

#106

Post by gruez »

downWidOutaFite wrote: post #75
asdasdsddd wrote: post #59

> Apple buys a far larger share of smartphone and computer semiconductors, given that it accounts for half of global smartphones sales and earns 85% of all smartphones I feel like I'm getting trolled by the author who is citing sales and profits instead of units produced as a metric.

You don't think that's a pretty good proxy for units? Especially leading edge parts.

But the 85% figure is almost certainly profit, not revenue. In that case using that as a proxy for units sold is so absurd that it's bordering on bad faith argumentation.

Re: Apple is America's semiconductor problem

#107

Post by ankit219 »

A weird article.

Apple was not the first or the only company to look to East Asia for cheap manufacturing, elctronic equipments, chips, or cheap labor. The trend was started and accelerated by motor companies and hardware just followed suit.

Then, some other points are just...there. Apple is America's semiconductor problem because Apple is so big it purchases things in bulk and gets discounts - like every other big company in every industry.

TSMC sold 100% of the capacity to Apple for 3nm chips because no one else had the designs ready, Apple needed them in bulk, and the yield wasn't that high. It is problematic, but you need to mention these things when making a claim.

The problem is two fold - other companies are not really innovating and experimenting at semis with a scale at which Apple is. This is a market failure more than an Apple failure. Others were reliant on Qualcomm, broadcomm, samsung, and Intel, with slower pace of innovation. Then there is Asian countries with cheap economies of scale.

It's one thing to assume the most nefarious intent from the start and then look at everything from that lens. It mostly leads to paranoia, not insight.

Re: Apple is America's semiconductor problem

#108

Post by kergonath »

hx833001 wrote: post #85

Intel should have produced ARM chips for Apple as a foundry. If they’re to be wildly successful again, they will be doing this anyway. They gave up 18+ years out of x86 pride and bad leadership. I hope Gelsinger can beat TSMC at the process technology game and win Apple’s business.

I think we’d be better served with 3 or 4 companies with close-enough-to-cutting-edge fabs than just Intel. The times when Intel was the undisputed king were not that good in the long run. We need alternatives.

Re: Apple is America's semiconductor problem

#109

Post by asdasdsddd »

downWidOutaFite wrote: post #75
asdasdsddd wrote: post #59

> Apple buys a far larger share of smartphone and computer semiconductors, given that it accounts for half of global smartphones sales and earns 85% of all smartphones I feel like I'm getting trolled by the author who is citing sales and profits instead of units produced as a metric.

You don't think that's a pretty good proxy for units? Especially leading edge parts.

So because Apple makes higher profit, they purchase a higher proportion of the highest quality parts. And the fact that they choose to purchase from Asia is bad because we want domestic production? I guess I can buy it, but I feel like this is more of a failure of American fabs more than anything.

Re: Apple is America's semiconductor problem

#110

Post by matwood »

rice7th wrote: post #44
brigadier132 wrote: post #11

The kind of monopoly apple has is interesting. In the US Apple has a complete monopoly on customers that spend money. If your app shows ads, apple customers are more valuable. If your app sells any kind of product apple users buy more. Market power is not determined by the number of users but by control of revenue.

I guess apple works more as a "cultural monopoly", where if you don't own some apple device you're automatically ostracized by other apple customers. To them apple is more like a fashion clothing company like gucci than a technological one. Apple provides some sort of "privileged status" to their customers, just like purpur in ancient rome, so of course each apple stan considers themselves superior, and to keep their…

Wow. I think your comment says more about you than anyone who owns an Apple device.
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