Apple tends to be overly concerned about every half cent in the bill of materials. This is why many of their accessories have substandard (weak) processors and flopped. HomePod used a 4 year old chip which wasn't very responsive to voice commands.
Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%
141–150 of 271 posts
Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%
#142I'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…
It can get worse. At one point Walmart mispriced a product then came after my company for the loss. That was an awkward moment. Edit: even worse, now customers expect the lower price, eroding your pricing power.
Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%
#143Earlier 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.
And when everyone has done their homework, there's no real reason to delay the inevitable.
Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%
#144Earlier 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.
It may take time, and it may take more money than people want to spend, but I don't see how it can cost much more than half a trillion dollars, since you could just buy TSMC for less than that.
Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%
#145Earlier 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?
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
Just because you have money, doesn't mean you can magic resources organisation and training out of nowhere.
This sounds like the same neoliberal fantasy that trapped Europe into an energy crisis.
Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%
#146Earlier quoted context omitted.
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
> The only real option Apple would have... TSMC has a market cap of $356B and maybe $30B in cash. Apple has a market cap of $3.25T and over $200B in cash. Surely you are overlooking a possible option here, which is Apple acquiring TSMC. I don't see it as likely, but it is an option.
Taiwan's government would never allow TSMC to be acquired, it's key to their national security
Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%
#147I'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…
[deleted]
Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%
#148I'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…
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 interest rates.
Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%
#149Earlier quoted context omitted.
Probably a lot less interesting than it seems because it's not like Tim Cook comes into a board room to negotiate. Most likely middle managers/directors emailing each other.
> Most likely middle managers/directors emailing each other. Pretty much like sovereign nations negotiating treaties. Which is an apt metaphor, because neither Apple nor TSMC has the ability to force the other to do anything. So, negotiations become a crawl to find a mutually-acceptable local optimum. Which ends up with both getting things they see as strategic priorities, while compromising on things they care about…
Having worked at a company that got an Apple deal... It usually isn't a level bargaining table... And it isn't unusual for no profit to be made whatsoever on the Apple deal, because merely the rumour that Apple has signed a deal with your company has so many other benefits.
TSMC is in a stronger position than most suppliers, because they have really strong demand for their product and don't need the prestige that an Apple deal offers.
Re: Apple Has Reportedly Rejected TSMC's Chip Price Hike of 6%
#150Earlier quoted context omitted.
You think it's possible apple builds a new fab (they have none) and immediately jumps to better than TSMC 5nm?
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?