Apple Unsuccessfully Tried to Purchase Exclusive Access to TSMC Chip Production for iOS Devices

[gnasher729]

Originally Posted by daveathall

Any company that manufacture exclusively for another company opens its self up for a "Price review"

A very famous company in the UK used to buy a certain item from another company, it kept ramping up its requirements, the manufacturing company had to loose all its other customers to keep up with that requirement. Once it was manufacturing exclusively for that company and lost all of its other contacts they were hit with a price review (We don't want to pay you that much for that item as before, we want to pay you less) That company and many others went out of business, the large company then went to other companies who, initially thought that they had hit the jackpot, then they were hit with "price reviews" until they could no longer carry on.

I thought you were describing Walmart here.

[Mr. Retrofire]

Originally Posted by Twixt

for 10bn USD do you think they would have refused, eggs in one basket or not?

Yes. In one year alone, TSMC has a net income of > 5 billion US$. And btw:

Originally Posted by wikipedia.org

Taiwan Semiconductor Manufacturing Company, Limited or TSMC (TWSE: 2330, NYSE: TSM) is the world's largest dedicated independent semiconductor foundry, with its headquarters and main operations located in the Hsinchu Science Park in Hsinchu, Taiwan.

They do not need Apple.

[Bubba Satori]

Originally Posted by genovelle

Only hated by crooks who steal music and movies and love companies that steal IP

And crooks who steal phone signal?

Hypocrite.

[GenesisST]

Originally Posted by Nova Sensei

Or that English is not everybody's first language

Don't worry, I was PM'ed one time for pointing out to grammar errors... So the grammar nazi hunters (this is NOT Godwin's law in effect!) will get to it...

That said, English isn't my first language (French is)... So does that mean the rule doesn't apply to me? 'Cause I would go on a rampage!

[matrix07]

Originally Posted by GripperDon

You are really the fanboy, APPLE is dead wrong, They are the way to becoming hated, losing the rest of the fading aura of being a good company. These patent lawsuits are not only stupid in the long run but really anti American spirit, Rounded corners make me laugh.

Yeah because Apple won patent suit on round corner. Now goes back to school.

[gnasher729]

Originally Posted by MH01

ummmm how exactly do you distinguish between "those that are not capable" and those that "cannot be bothered" to write correctly in their first language?

I'd be ***** off if I had a learning disability and someone told be I cannot be bothered. You see where I am coming from right?

A learning disability doesn't make you write "ummmm" and doesn't make you write "be" instead of "me", just as an example how you can distinguish. And people who were unfortunate enough not to get an education that taught them how to write properly are again penalised by every single badly written post, because every single badly written post makes it harder to learn by reading.

[YGAB]

TSMC's CEO Morris Chang referred to Samsung as the 1 ton gorilla... looks like Apple's roller coaster marriage with that hairy gorilla may be short-lived.

[ChrisTX]

Originally Posted by clibinarius

If Apple's so wanting to move away from Samsung, wouldn't it make business sense to not extend contracts to Apple, driving up the cost of iOS devices while keeping production capacity for the Samsung phones? Wouldn't that mean Samsung gets the money in the end? Wouldn't Apple be aware of this?

I don't think Apple wants to be less reliant on Samsung as much as be able to survive natural disasters-Hello Brazil! Same with Samsung, I think they'd prefer to diversify their production (welcome to Texas).

Samsung isn't stupid, despite all of the litigating going on, Apple is a HUGE customer of Samsungs. That would be suicide to separate from Apple.

[samcraig]

Originally Posted by ChrisTX

Samsung isn't stupid, despite all of the litigating going on, Apple is a HUGE customer of Samsungs. That would be suicide to separate from Apple.

Suicide, no. Huge dent in their business - sure.

[Chupa Chupa]

Originally Posted by GripperDon

You are really the fanboy, APPLE is dead wrong, They are the way to becoming hated, losing the rest of the fading aura of being a good company. These patent lawsuits are not only stupid in the long run but really anti American spirit, Rounded corners make me laugh.

Yes, Apple is on the way to be hated in the same way Dell suggested Apple was on its deathbed back in 1997. You live in an apple-hate bubble. The 90% of Apple customers that are not fan boys or girls, and don't follow the day-to-day minute don't care about patent suits, or Apple Store cutbacks or any of that inside baseball crap. They care about products that are easy to use.

As far as the lawsuits being stupid, so far it seems its worked out well for Apple. Most of its claims have thus far been affirmed. We'll see if they get treble damages, and then, if it goes to appeal, what that court says.

And against the "American spirit," hate to tell you but IP protection is in the U.S. Constitution. So in, spirit, Apple is in tune with what the Founders envisioned.

Now, if you argued that current IP law was not in the spirit of what the FF envisioned, then I'd agree with you. The protection lengths, especially, are much too long and go against the entire idea of what IP production was written into the Constitution. But your issue there is with Congress and current and past presidents who enacted current law.

Specifically on the rounded corners issue you mention... it seems like you only read the Cliffs Notes version of the decision. The only rounded corners that infringed were the iPhones, and only because Apple registered the iPhone's design as trade dress. The jury, OTOH, said the iPad's rounded corners were not protected because that design was not registered.

[tone*]

Originally Posted by Gnomepatrol

intel has no experience in fabricating a mobile chip at that low of a power draw.

What about their strongarm and xscale experience?

[YGAB]

Originally Posted by Mr. Retrofire

Yes. In one year alone, TSMC has a net income of > 5 billion US$. And btw:


They do not need Apple.

That's strange... TSMC addressed in last month's shareholder meeting explaining their US$2B increase in R&D expenditure was primarily eyeing Apple in '13 & '14 as their main, targeted customer in their next advance chip.

it's no secret that all the major Taiwanese mobile/PC supply chain players want a big slice of that irresistible Apple pie.

[alent1234]

Originally Posted by YGAB

That's strange... TSMC addressed in last month's shareholder meeting explaining their US$2B increase in R&D expenditure was primarily eyeing Apple in '13 & '14 as their main, targeted customer in their next advance chip.

it's no secret that all the major Taiwanese mobile/PC supply chain players want a big slice of that irresistible Apple pie.

TSMC already makes chips for qualcomm which go into iphones

they just don't want apple to own part of the company and dictate their business

----------

Originally Posted by tone*

What about their strongarm and xscale experience?

they sold that off

[G51989]

Originally Posted by Twixt

for 10bn USD do you think they would have refused, eggs in one basket or not?

Yes. Doing business with Apple and Apple only is not something this company appears to be interested in.

[samcraig]

Originally Posted by YGAB

That's strange... TSMC addressed in last month's shareholder meeting explaining their US$2B increase in R&D expenditure was primarily eyeing Apple in '13 & '14 as their main, targeted customer in their next advance chip.

it's no secret that all the major Taiwanese mobile/PC supply chain players want a big slice of that irresistible Apple pie.

Just like Apple wouldn't want to be 100% reliant on Samsung; TSMC wouldn't want to be 100% reliant on Apple. And that's what Apple wanted. Exclusivity.

[tdream]

De-nied!!!!!

[Constable Odo]

Apple should have done everything possible in order to get complete exclusivity. What the heck is that huge cash reserve for if not for extreme leverage? I see TSMC's point of view though. They could have just set a exclusivity time period, though, and that might have worked well for both parties.

[samcraig]

Originally Posted by Constable Odo

Apple should have done everything possible in order to get complete exclusivity. What the heck is that huge cash reserve for if not for extreme leverage? I see TSMC's point of view though. They could have just set a exclusivity time period, though, and that might have worked well for both parties.

Apple did everything they wanted to do at the time. TSMC denied their request. And just because Apple has a wad of cash doesn't mean THIS exclusivity agreement was worth burning any/a lot of it as "leverage."

[whooleytoo]

Originally Posted by chrmjenkins

Doesn't matter how much they offered. Putting all your chips in one basket is risky no matter the customer.

Absolutely. Not only would it introduce huge risk for TSMC (if Apple were to move to another technology, TSMC would have to build a new customer base from scratch), but also it would mean Apple would - effectively - own TSMC. As the only client, Apple could freely dictate terms in future negotiations since TSMC would have little or no leverage.

[Mad-B-One]

Did anyone read that AMD is rumored to stop desktop CPU production and wants to solely produce for server and graphics? Maybe Dresden/Germany would be an excellent factory for the next few years making high yield ARM processors, given the fact that Apple and AMD switch managers once in a while...

[Gnomepatrol]

Originally Posted by Mad-B-One

Did anyone read that AMD is rumored to stop desktop CPU production and wants to solely produce for server and graphics? Maybe Dresden/Germany would be an excellent factory for the next few years making high yield ARM processors, given the fact that Apple and AMD switch managers once in a while...

No, they are stopping the IPC race with Intel. They are focusing on three things: their APU ( CPU+GPU on one die and the scalability of it on all platforms), GPUs (8xxx and future productions), Bulldozer to Steamroller for server market.

They are not dropping out of the CPU sector, they are just focusing their time on their APU rather than a race with Intel. Which is good since the APU is an architectural masterpiece and unless Intel can figure something out it is going out lose out to AMD big time in the consumer and OEM market. (Last part is obviously my opinion)

[chrisfromalbany]

Originally Posted by archurban

now we all know that Apple has tried to monopolize IT industry which is totally illegal in the US. but they do now with stupid patent lawsuit. stop doing. it makes you being stuck into the hell, and will never get out of a hole. if you really concern about manufacture, why don't you make your own since apple has been the biggest valuable company in the world with so much cash? do it now. don't be depending on any company or subcontract anymore. well, you can't. you can't live along especially in business market. cooperation is only way to survive. don't you know?

think this explains my views on this statement

[Battlefield Fan]

Originally Posted by archurban

now we all know that Apple has tried to monopolize IT industry which is totally illegal in the US. but they do now with stupid patent lawsuit. stop doing. it makes you being stuck into the hell, and will never get out of a hole. if you really concern about manufacture, why don't you make your own since apple has been the biggest valuable company in the world with so much cash? do it now. don't be depending on any company or subcontract anymore. well, you can't. you can't live along especially in business market. cooperation is only way to survive. don't you know?

TSMC isn't the only chip maker so they wouldn't be creating a monopoly. They'd be trying to move everything in-house.

[Alameda]

It seems to me that there are a lot of misunderstandings here about how semiconductor manufacturing works.

Most semiconductor companies today are fabless -- they design and test their chips, but actual manufacturing occurs at TSMC or another fabrication house. The reason is that a semiconductor fabrication plant costs over $1 billion. To make this profitable, the fab needs to run 24/7. You can't compete if you build a fab and only take advantage of 25% of its capacity, because you have to amortize the factory cost. TSMC basically "timeshares" its fabs among many customers, in order to share its manufacturing capacity across many semiconductor design companies (such as Qualcomm, Broadcom, etc).

It costs millions of dollars to design and validate a semiconductor, before even hitting the fab house. Then, very expensive masks have to be made - mask costs can run into millions of dollars for some processes, and it's time-intensive, so you cannot have a mistake in your design. This isn't software, where you can recompile and re-test.

Once the masks are made, sample wafers are made and tested, and minor mask changes are made, if necessary. Here's the important part: Once the masks are validated for production, they are validated only for that plant. Occasionally, a mask can be validated for production at two TSMC plants, but never across two companies, like TSMC and UMC. It simply isn't done.

The problem is that when demand is high, TSMC puts its customers on allocation. Instead of 10 million parts a month, they'll cut you back to 8 or 9 million a month. This has obviously affected Apple and Qualcomm, so much so that they're offering up $1 billion for exclusive fab access. For some reason, TSMC said no. Perhaps the cost of the fab is greater than $1 billion, or they have limited fabs and their total revenue is higher if they simply run them 24/7 across a range of customers. I don't think Apple and Qualcomm are trying to corner the market, they're trying to ensure reliable part supply.

Personally, it may make sense for the US government or a private consortium to form for American semiconductor manufacturing, but it is no easy feat.

I hope this long post was helpful to some of you.

[oliversl]

Ho much TSMC cost? 100 billion dollars? Less? Why just don't buy them