Apple Now Facing Unprecedented Competition for Chip Supply

[MacRumors]

Apple increasingly has to compete with other companies for chips made by Taiwan Semiconductor Manufacturing Co. (TSMC), as surging demand for artificial intelligence reshapes capacity and customer priority.

According to a detailed report published by semiconductor analyst Tim Culpan on his blog Culpium, Apple is no longer guaranteed preferential access to leading-edge manufacturing capacity at TSMC, marking a notable change after more than a decade in which Apple's chips were central to the foundry's expansion strategy. Apple is now competing directly with AI-focused customers such as Nvidia and AMD for supply, particularly at the most advanced process nodes.

AI accelerators consume substantially more wafer area per unit than smartphone system-on-chips, meaning that even a smaller number of AI customers can absorb a disproportionate share of advanced manufacturing output. As a result, Apple's chip designs are no longer automatically prioritized across TSMC's two dozen fabrication plants.

Nvidia likely surpassed Apple as TSMC's largest customer by revenue in at least one or two quarters in 2025, but exact customer rankings are unknown. Apple ceased to be the primary driver of TSMC's revenue growth about five years ago.

The report suggests that Apple may face higher silicon costs for future chip generations as it competes with AI customers willing to pay premiums for priority access. While Apple is unlikely to be unable to ship products due to insufficient wafers, sustained pricing pressure with advanced nodes could influence product margins or pricing strategies over the next several years.

Article Link: Apple Now Facing Unprecedented Competition for Chip Supply

 

[wonderings]

Maybe time for Apple and the US to get into chip manufacturing so they are not dependent on Asia as the demand increases.

 

[akbarali.ch]

Time for self-owned Apple Fab?

 

[jarman92]

The AI bubble is screwing us all over in so many ways it's honestly astounding.

 

[I7guy]

Regulation is needed in this area.

 

[Abydos]

this too shall pass

 

[wonderings]

The AI bubble is screwing us all over in so many ways it's honestly astounding.

Maybe we just have to look at this in a different way. Maybe people will continue to use their computers longer and realize upgrading as often is really not necessary.

 

[mozumder]

It sucks, but Apple really has to develop their own fabs. "Real men have fabs" - Jerry Sanders

 

[tennisproha]

Didn’t Apple invest capital to expand these foundries? Surely they have a clause in their contract for minimum capacity allocation?

 

[ZipZilla]

If they do the Intel deal as rumored, Intel will contract manufacture the chips in (I think) Arizona and elsewhere. Tim Cook may suck at managing software development, but he is a supply chain genius.

 

[nt5672]

Yep, Apple is going to pay now for being the supply chain bully for the last decade and us users are going to lose.

 

[Mackan]

If they do the Intel deal as rumored, Intel will contract manufacture the chips in (I think) Arizona and elsewhere. Tim Cook may suck at managing software development, but he is a supply chain genius.

Intel will also prioritize AI customers as soon as they can if AI customers pay more. Only regulations will help to control greed. But we voted for no regulations.

 

[deconstruct60]

Maybe time for Apple and the US to get into chip manufacturing so they are not dependent on Asia as the demand increases.

If anything this reports is highlight that is exactly what Apple cannot reasonably due. The increasing amounts of money that new fabs costs is coming from folks OTHER THAN Apple. If Apple is increasingly not paying for TSMC fabs how is Apple going to pay for one of their own that is at least as good if not better? If Apple owns the fab and it is worse than TSMC what did they 'gain' ?

For bleeding edge fab production, a fab with one , and only one, customer is a fool's errand. Your competitors will always have more more money and capacity with pooled resources.

It didn't work for Intel and they have 2x (or more) the chip/wafer volume that Apple has. The bulk of Intel's problems now is that they failed to go get more customers in 2016-2018 timeframe.

As for the US 'getting into chip manufacturing'. Never left. Making them in the USA is almost completely immaterial to how much money other fab customers are spending. IF more fabs were in the USA the other customers with deep pockets would be buying up wafer starts there also. If trying to make a cause for developing overcapacity, then USA isn't particularly material either.

What is needed is more competition based on merit ( not trade protection) . Intel blew their semiconductor lead because they were both arrogant and starting listening more to 'Wall Street' than to potential customers. Fixing that isn't about where the fab geographical location is. That is more critically stop being 'dumb'. Similar Samsung has similar non techical ability 'hooey' clogging up the works at bit at their fabs. Nothing to do with location and more to do with management.

 

[cateye]

Time for self-owned Apple Fab?

How's that been going for Intel over the last 15-odd years? Why did AMD divest itself from its fab business? How are the fabs TMSC has been building in Arizona doing? In all cases: Unsolvable delays, staffing problems, cost-overruns, process failures.

Fabs are some of the most complex process-factories humankind has ever created. Consolidation is what makes them profitable, and what focuses the investments, knowledge, skilled labor, and risk mitigation into a functional organization. The alternative is setting great big piles of money on fire for zero gain.

 

[Neko1500]

If they do the Intel deal as rumored, Intel will contract manufacture the chips in (I think) Arizona and elsewhere. Tim Cook may suck at managing software development, but he is a supply chain genius.

Where’s the WATER?

 

[darkblu]

And we all thought the war against AI would be fought in The Matrix.

 

[deconstruct60]

Didn’t Apple invest capital to expand these foundries? Surely they have a clause in their contract for minimum capacity allocation?

Apple doesn't want very long term. minimal capacity. Over time the fab process Apple is using in the highest volume changes. 3 years later Apple is selling now here near as many. A13's as. A16's.

You missing the point , the same 'jump in before production starts and get slots for first year or so' is something that TSMC is going to give anybody with a very large stack of money. There are fixed number of ASML production machines TSMC can buy so this is a zero sum game. TSMC isn't going to take even more money and buy even more ASML machines. There aren't anymore.

 

[jarman92]

If they do the Intel deal as rumored, Intel will contract manufacture the chips in (I think) Arizona and elsewhere. Tim Cook may suck at managing software development, but he is a supply chain genius.

Intel isn't remotely capable of manufacturing the chips Apple needs and won't be for probably a decade, if ever.

 

[jarman92]

Where’s the WATER?

Or the electricity. Or the supply chain. Or the engineers. Or the factory workers...

 

[bmustaf]

Even as someone heavily invested (financially and otherwise) in the Apple ecosystem, they've fumbled the UI/UX, quality, and AI features/products so badly in the last 5 years (the only thing I can truly say has been successful is Apple Silicon), I am glad to see _credible_ competitors come up.

The effects of 1. Apple having to fight a bit more for access and 2. competitors getting access to TSMC processes on an even playing field is a major part of Apple getting the competition it needs to get back on track, or to the chapter of their dominance to wane (I hope it's the former, but this "era of meh" at Apple really needs to end).

 

[JPack]

For people thinking Apple can just "own" a fab, no.

It's not like buying a coffee machine. Most of the expensive, time consuming, and risky part is development work of new processes and nodes. You then need the volumes to match up with those expensive nodes to pay for NRE.

Do some people think TSMC just buys ASML machines, runs them, and collects profits?

 

[deconstruct60]

If they do the Intel deal as rumored, Intel will contract manufacture the chips in (I think) Arizona and elsewhere. Tim Cook may suck at managing software development, but he is a supply chain genius.

Intel doesn't have enough capacity to do all of Apple and all of Intel (at current levels. If they keep loosing share maybe). Apple is only going to be able to offload a subset there. And Intel has lots of reputation building to do before Apple could exit TSMC.

However, Intel likely isn't 'cheaper' than TSMC. It doesn't appear that Intel is trying to deeply undercut TSMC on costs. Apple isn't gong to arm twist them into extremely deep discounts. Fab costs are going up if Apple wants to stay close to the bleeding edge of what is possible. IT is just harder to do.

 

[smithrh]

It's almost like it would be a good thing if someone that understands supply chains would be in a top position at Apple right now...

 

[Mojohanna32]

Maybe time for Apple and the US to get into chip manufacturing so they are not dependent on Asia as the demand increases.

This is why they are pushing Intel to do ARM fab in there factories.

 

[Evagoras2001]

Apple should have bought TMSC when they first created their partnership. TSMC exists because of Apple