Apple Chip Supplier TSMC to Expand Production Capacity With $100 Billion Investment Over Next Three Years

[Macintosh IIvx]

TSMC makes chips for a LOT of companies. Pretty much anyone in communications, radios, television, medical, video games, and more. If they're not Intel or one of the other major chip makers, TSMC makes it. They have over 450 customers, including Apple.

 

[mschmalenbach]

What happens to TSMC if China takes over Taiwan?

A good question.

It's so quick & easy to render useless the equipment in a fab.
China's most advanced fab node is with SMIC's 14nm process - BUT - the equipment & expertise it needs, especially equipment, comes from outside China - and is subject to export restrictions & overwatch.

The vulnerability for the West isn't if China takes over Taiwan - it's in less obvious areas, such as the companies that make the packages for these chips - even the simpler ones - lead frames, mold compound being the more obvious ones. There's so little profit in these 2 specific areas that it's very difficult for the current manufacturers to justify significant investment to increase capacity. Not without significant government help - that's the free market for you!

Here we're focusing on the bleeding edge nodes. But the vast majority of chips are made on considerably less complex nodes and for good reasons. A microcontroller rather than high end SoC is often in a harsher environment than an Apple Bionic SoC for example. It needs to cope more robustly with voltage spikes, higher voltages in general, operate at higher currents, while at the same time not needing such higher performance in processing or in memory speeds & sizes. At say 130nm process node it can do all of this, and is way cheaper to produce. A very useful 32bit ARM based microcontroller with a few Kb of RAM and maybe 16Kb of Flash for program storage, plus a few timers, I/O ports etc can be had for well under $0.50 in volume.

These devices are everywhere - multiple dozens in a typical car, just about anything that is in the kitchen, living room or bathroom that uses electricity has at least one.

And it's in these areas that China can really compete, especially on price, and already is.

 

[TomMcIn]

When I looked up the locations of the TSMC foundries, most were in Taiwan. Give China's recent directions, these foundries would make a strategic target. Also read where the Chinese navy has about the same capability at the US Navy without being spread all over the globe. As a previous posts said, destroying the TSMC foundries in Taiwan would be costly.
Questions. Where are the new foundries going to be built? What are Tim Cook's supply chain plans for TSMC and China and Intel? Could an American company replace TSMC production outside the Far East?

 

[Glideslope]

What happens to TSMC if China takes over Taiwan?

WW III.

 

[CJ Dorschel]

Damn, I knew I should have invested in TSMC last year.

 

[zubikov]

There's a lot more to the story than the headline. TSMC has such dominance in chip manufacturing (> 50%), that all chip designers are essentially putting their eggs in one basket. Apple doesn't want to make this move, it has to because there is no alternative. You do not want the most critical industry in the world to be this concentrated.

As consumers we should actually be ROOTING for Intel, Samsugn and others to sink ungodly sums of money into next-gen chip fabrication. That would mean lower prices, better products for all of us; as well as a stronger supply chain for companies like Apple.

 

[macinfojunkie]

There's a lot more to the story than the headline. TSMC has such dominance in chip manufacturing (> 50%), that all chip designers are essentially putting their eggs in one basket. Apple doesn't want to make this move, it has to because there is no alternative. You do not want the most critical industry in the world to be this concentrated.

As consumers we should actually be ROOTING for Intel, Samsugn and others to sink ungodly sums of money into next-gen chip fabrication. That would mean lower prices, better products for all of us; as well as a stronger supply chain for companies like Apple.

I think this is a concept that tribalists/fanboys struggle with. Seeing the success of what they root for being at the expense of the opposition. To win, the other must lose or the converse. The world is not that simple.... and I dread to think how empty and shallow an existence one must lead to even contemplate the demise of a company as being something to root for. Those basements must be pretty bleak places 😅

 

[Kevin2055]

What happens to TSMC if China takes over Taiwan?

It didn't happen in the last 70 years, so less likely to happen in the near future if people don't do stupid things to trigger it.

 

[ray6088]

It didn't happen in the last 70 years, so less likely to happen in the near future if people don't do stupid things to trigger it.

You are wrong

 

[SSDGUY]

Maybe use a few of those bucks for a logo update?

 

[mdriftmeyer]

Thing is... only one company based in the Netherlands, ASML, is making the Extreme Ultraviolet Lithography machines that are required to fab these 5nm chips and they are totally booked up with orders. Unless they increase production as well, this is going to be a difficult road.

There are two more competitors in the market now. They are delivering their first lines this year.

 

[name99]

What is the photo showing?

I can't speak for this photo, but when I was at Apple in the QuickTime group (all of the 1990s) we (ie QuickTime) had a similar room, rows of racks just like that, with every mac (and many representative PCs), and with different configs, that we supported, and they just ran new builds 24/7 trying to catch the most obvious low-level bugs, things that would crash the machine (or at least crash QuickTime).

For HW (and for low-level OS stuff) this sort of testing is a great idea, and Apple is in fact pretty reliable at the level of the hardware or the OS not crashing. Unfortunately this sort of testing does not catch higher level flaws -- UI bugs, UI design flaws, cases where a feature has randomly been removed from app, things like that -- and it is an endless procession of bugs like that where Apple is currently so weak.
In principle human testers could catch them; in practice I think the human testers have all caught Stockholm Syndrome and are so used to how their developer team thinks that they don't even realize when a design change is highly intuitive, or removes functionality important to a lot of people.

 

[Nicky G]

Thing is... only one company based in the Netherlands, ASML, is making the Extreme Ultraviolet Lithography machines that are required to fab these 5nm chips and they are totally booked up with orders. Unless they increase production as well, this is going to be a difficult road.

I would think some of these investments include TSMC paying it forward to their own suppliers, much as Apple and the other big customers can make commits to large purchases which allows TSMC to expand supply however it can.

 

[ohbrilliance]

Maybe use a few of those bucks for a logo update?

That logo represents the success of a company focussed on engineering, not marketing. The way TMSC has been going, they should keep it as it is.

 

[Freeangel1]

boy! it would really be something if APPLE silicon was a FLOP.
And Intel and AMD left APPLE in the DUST with powerful CPU's powered by WINDOWS 10!
I think it Just might Happen.

 

[LordVic]

That logo represents the success of a company focussed on engineering, not marketing. The way TMSC has been going, they should keep it as it is.

So much spent to remind us all that INTEL powers everything. INTEL INSIDE™.

Meanwhile, TSMC, a name only us geeks likely know about, are right now making some of the most used processors around the world.

Clear evidence where the priorities for both these companies have been.

If they lose the laptop space right now, they're hosed.

 

[applesed]

Isn't it ironic how one of the main reasons Apple moved to their own platform of chips is that they could have more control over the scheduled release of new products? And due to the global shortage of chip manufacturing, they still have that problem after ditching Intel? Geez.

 

[Freeangel1]

By the way. It shows REAL STUPIDITY to have a foreign country manufacture your chips.
WHY????
SECURITY.
Manufacturing purposeful FLAWS in the CHIPS can be introduced in the manufacturing process for purpose of future hacking Attacks.

By Intel choosing to make chips here on USA soil a much better SECURE manufactured Chip.

 

[cmaier]

boy! it would really be something if APPLE silicon was a FLOP.
And Intel and AMD left APPLE in the DUST with powerful CPU's powered by WINDOWS 10!
I think it Just might Happen.

But apple silicon is not a flop. And even if Intel made ARM chips, they couldn’t compete with Apple’s, because Apple has tight integration between its software, compiler and hardware. And OS’s that run on RISC-V have what market share, again?

 

[MacBH928]

At $100B investments, why don't Apple just build their own facility and cut the profit margin of TSMC. I don't think this needs the cheap Chinese labour.

 

[huge_apple_fangirl]

At $100B investments, why don't Apple just build their own facility and cut the profit margin of TSMC. I don't think this needs the cheap Chinese labour.

Are you being sarcastic? At $100B investments, this is exactly why Apple should not enter this business. Apple outsourcing manufacturing significantly increases their profit margins because they don't have to all that insane capital expenditures.

 

[cmaier]

Are you being sarcastic? At $100B investments, this is exactly why Apple should not enter this business. Apple outsourcing manufacturing significantly increases their profit margins because they don't have to all that insane capital expenditures.

Maybe. TSMC’s capex doesn’t come for free - Apple pays for it when they buy wafer starts. And it sounds like TSMC has lines dedicated to Apple, so it’s not like a lot of the capex cost associated with Apple’s cpus is being shared by TSMC’s other customers. I’d suggest that a better reason for apple not to do it is risk. It’s very easy to run into a sudden roadblock when attempting to bring the next fab node online. That’s what killed intel (with the 10nm), and AMD was never too great at it. The ability of Apple to switch fabs (with at least a year’s notice) to whoever is winning the fab war is an advantage - if you build your own fab (would cost apple $20B for the fab, minimum, and you likely need to start over again in a few years while keeping the old fab on-line to keep making chips for older devices) then you end up stuck when the fab has problems.

 

[MacBH928]

Are you being sarcastic? At $100B investments, this is exactly why Apple should not enter this business. Apple outsourcing manufacturing significantly increases their profit margins because they don't have to all that insane capital expenditures.

You do understand that when Apple buys from TSMC they are paying for all the costs + profit margin?
Apple has chips in all devices they sell so makes sense to make it cheaper by cutting out the profit margin. They can build chips for others too, which will make them even more money.

They can build their own X company that builds chips for them and others.

 

[SSDGUY]

That logo represents the success of a company focussed on engineering, not marketing. The way TMSC has been going, they should keep it as it is.

What do the well-crafted logos of equally successful companies represent?

 

[name99]

What do the well-crafted logos of equally successful companies represent?

Depends whether they are public-facing or B2B ...

A public-facing company, like Apple, has good reasons for carig about its logo.
A B2B company like TSMC is well aware that people buy foundry time based on its technology, not on the prettiness of its logo.

Does it matter? Maybe it does.
With Pentium, Intel made the decision to become public-facing, to make the public care specifically about buying an Intel CPU. And for maybe 20 years this seemed like a fantastic decision. EXCEPT that at some point in the process, Intel started to actually believe that it was primarily a marketing company. More effort seemed to go into SKU segmentation and the next campaign than into designing a better product. At some point true insanity set in, when 10nm was essentially rendered unusable for many many years. And why? To be able to make (ultimately very hollow) marketing boasts about having highest transistor density.

Once you allow marketing to be even a small part of your worldview, it's very hard to stop it from taking over. How many companies have gone that way? Sony? Check. HP? Check? Samsung? Already happened to the products, happening before our eyes as a repeat of Intel, on the foundry side. Boeing probably followed the same path, though I know the history much less well.
TSMC seem aware of the danger and intent on saying: marketing gets this far and no further -- you don't even get a logo redesign.
Or to put it differently, when the logo redesign happens, start thinking about selling your TSMC stock...