Apple Now Facing Unprecedented Competition for Chip Supply

[deconstruct60]

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

Intel has undertulized fabs. Under capacity means there is some electricity from the other part of campus not using as much. There was already flow of basic supply chains materials to the existing site and. have factory workers who need more shifts filled.

Can Intel do the entire scope of Apple production? No. But neither can Apple move all of it there quickly either. A17,A18,A19 prodution isn't going to move to Intel even if Intel had fully equipped factories ready to go. Legacy silicon isn't going to be redesigned to get onto a new process at deep discounted prices.

 

[Wx_Man]

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

Watch all three CPU manufacturers CES keynotes ( Nvidia, Intel and AMD ). It was all AI and nothing consumer. It fact AMD’s Lisa Su, CEO of AMD and cousin of Nvidia’s Jensen Huang, rolled out Trump’s head of AI strategy for a cringe back and forth onstage. It was all so pathetic. Gamer Nexus has 3 recap videos that are BRUTAL to all three companies CES keynotes in which NO consumer products were touted.

This is the end game folks. Everything will be digitized, virtualized, tokenized, and controlled and monitored by AI in global planetary power sucking data centers run by Oracle, Meta, Google, Microsoft, Apple and Amazon. Entire governments and other military and intelligence apparatus are now or will be nearly to wholly run on one or more of these companies’ platforms.

“You’ll Own Nothing and Be Happy”.

 

[deconstruct60]

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

TSMC existed before Apple's partnership.
Before they were banned , Huawei was producing on advanced nodes at the same rate Apple was. Apple was never the only customer TSMC had on advanced nodes.

Even today a very substantive amount of TSMC revenues is nodes Apple does not use in high volume. TSMC would be dead now if they only had one customer. If Apple has thrown away all of the other customers who were helping to improve TSMC production Apple would have missed out on all those improvements also. ( e.g., Xlinix was doing more with TSMC on advanced multiple chip fabrications more than several years before Apple incrementally fiddeled with Ultra. AMD is doing direct bonded L3 cache years before Apple is doing anything similar. etc. )

Apple doesn't have to 'buy' any design/development that other folks are doing extremely well. They certainly don't want to buy any actual manufacturing plants. Apple does make anything themselves. That is all contracted out. That is not their primary skill set.

 

[sw1tcher]

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

Advanced chip manufacturing does happen in the U.S. Aside from Intel, Taiwan Semi has a fab in Arizona already running. It's been producing chips since late 2024.

Taiwan Semi has completed building a 2nd fab in Arizona and it's expected to start producing 3nm chips by the end of the year.

Taiwan Semi has a 3rd fab under construction in Arizona, with plans for 3 additional fabs and packaging facilities that are all expected to start operating by the end of the decade.

After reporting blowout earnings yesterday, Taiwan Semi announced that they've purchased more land in Arizona to build even more fabs.

 

[deconstruct60]

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

ARM fab? Fabs don't care what the instruction is at all.

There is coordination between ARM and Intel to do some design qualfications and certifications of ARM ready-made designs on Intel's fabs. However, Apple designs their own ARM implementations ( has to pass certain specs to Arm statisfaction, but Apple does the work) . Apple would have to have to get their own stuff over to Intel independent of what ARM does with Intel.

Intel was running around trying to recuirt RISC-V implementations over to Intel Fab also. They fab shouldn't care. It is more about the ease of being able to attract a wider set of client who might be doing custom or semicustom work with some baseline CPU/GPU intellectual property they licensed and are augmenting somehow.

 

[crsh1976]

What was it a few weeks ago about Apple having secured ample capacity thanks to their sizeable market presence and such?

Everybody is getting chumped by the greed-driven AI craze except a handful of people.

 

[bollman]

Even Apple being the richest cannot compete with AI. The AI-companies print money by just investing in each other and they can pay whatever crazy money to be able to get all the fab they want. The demand is impossible to satisfy and due to endless amount of investor money, they can just pay whatever sum they can come up with to kick out all other customers.
There is a reason RAM price is skyrocketing; AI just sucks all available fab up and they pay crazy premium. The rise in RAM pricing is only due to the limited supply.

 

[thebarrkbyte]

Further proof AI is a bubble. It's increasingly hogging up resources in the market with no tangible use for everyday people. Out of the 50 people I know, none use AI more than via Google search. So, I am understandably confused on how important this technology actually is and why it is clogging up RAM and now chip demand?

And when I have looked at AI itself, in the Google search, it is noticeably less than before. Search results are now worse, where what I wanted or needed was top result is now 6th or 7th which is bizarre for me.

As for the Google AI results for questions? It continuously gets information partially or outright wrong. It is also overly wordy, talks in circles, and has a strange affinity to never actually give a result but be as ambiguous or hedging as possible.

And this is when asking it about questions that have ZERO room for discussion like the sun or moon.

The only tangible interaction I have had with AI is severely mediocre videos that are confusing, completely factually inaccurate, or just downright nonsensical things like a Tiger saving a snake from death. They're fun the first few times but after awhile, it's weird to watch a man being chased by a bear on a snow board whose fur changes colors multiple times. And then I wonder what the point of the video was and now I merely report them as spam. Because that's what AI feels like to me, spams me to use it and no matter how many times I tell it I do not want to use it, it asks again.

 

[sw1tcher]

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

Further proof AI is a bubble.

People who keep saying there's an "AI bubble" don't know what they're talking about.

Refer to Taiwan Semi's earnings report yesterday. They cannot meet all the demand they're seeing. There's so much demand that they're increasing their 2026 capital expenditures by up to 40% vs 2025's capex to meet all that demand.

Taiwan computer chip maker TSMC to expand investment as profit jumps 35%

Taiwan-based TSMC, the world's largest computer chip maker, says it plans to increase its capital spending by nearly 40% this year after it reported a 35% jump in its net profit for the latest quarter

abcnews.go.com

HONG KONG -- Taiwan-based TSMC, the world’s largest computer chip maker, plans to increase its capital spending by as much as nearly 40% this year after it reported a 35% jump in its net profit for the latest quarter thanks to the boom in artificial intelligence, the company said Thursday.

Taiwan Semiconductor Manufacturing Corp., a major supplier to companies including Nvidia and Apple, reported a net profit of 506 billion new Taiwan dollars ($16 billion) for the October-December quarter, a 35% surge from a year earlier, better than analysts’ estimates.

TSMC said it plans to boost its capital expenditure budget to $52 billion - $56 billion for 2026, up from about $40 billion last year.


They wouldn't be investing that much money to build out their manufacturing if there wasn't strong demand that will continue for years and years.

TSMC forecasts 2026 sales to grow almost 30%, capex to expand - Focus Taiwan

Taiwan Semiconductor Manufacturing Co. (TSMC) expects its sales to grow almost 30 percent in 2026 on robust AI demand and a recovery in non-AI applications, and will raise its capital expenditure by up to 37 percent to meet clients' needs.

focustaiwan.tw

Taipei, Jan. 15 -- Taiwan Semiconductor Manufacturing Co. expects its sales to grow almost 30 percent in 2026 on robust AI demand and a recovery in non-AI applications, and will raise its capital expenditure by up to 37 percent to meet clients' needs.

At a closely watched investor conference Thursday, TSMC Chairman and CEO C.C. Wei forecast sales growth of almost 30 percent in 2026 in U.S. dollar terms, far higher than the 14 percent growth projected for the entire global pure play wafer foundry market.

In the wake of robust demand for AI applications, 5G services and high performance computing devices, Huang said TSMC will raise its capex for 2026 to a range between US$52.0 billion and US$56.0 billion, up 27-37 percent from US$40.9 billion in 2025, when the figure was also 37.4 percent higher than in 2024.

 

[deconstruct60]

Further proof AI is a bubble. It's increasingly hogging up resources in the market with no tangible use for everyday people. Out of the 50 people I know, none use AI more than via Google search. So, I am understandably confused on how important this technology actually is and why it is clogging up RAM and now chip demand?

AI didn't screw up RAM. OpenAI , the company, screwed up RAM. They went out and locked up contracts on RAM wafers in the range of 40% of the market. They don't actually make any hardware in substantive volume, but bought gobs of RAM. It is 'AI' fault in that OpenAI has so much 'drunken salior spending money' that they can foolishly buy stuff they may not be able to use. However, it is also no really 'AI's fault that. OpenAI is a non-profit that doesn't have to responsibly spend money either. They spend money as fast as it comes in in part because they are a non-profit. Legally they can't make a profit.

LLMs are only OpenAI and the only AI hardware worth having is Nvidia are not so much a bubble, but over concentration on just two players in a broader market. Pretty good chance OPenAI RAM buy was as much to repress competitors as it was to provision building hardware. So also have 'asleep at the wheel' government regulators.


( Apple only doing a 'AI query hand off' to OpenAI also contributed to the problem. The 5-6 biggest tech companies picking the 'AI winner' for everyone is very dubious move. Safari can optionally 'punt' out to 7-10 search engines )

And when I have looked at AI itself, in the Google search, it is noticeably less than before. Search results are now worse, where what I wanted or needed was top result is now 6th or 7th which is bizarre for me.

Google appears to be doing less work to keep the index inferencing more highly tuned. The AI summaries cost 3-4x work to do so sucking up more resources that could have gone into better indexing. So basically a "rob Peter to pay Paul" situation. ( if AI summarizes get to a point they generate 3-4x more money then maybe that will get better. )

The AI engine attached to search summaries probably isn't the one that Apple is getting. Apple needs a more heavyweight AI engine not a lightweight one ( Apple already has a lightweight one that has lower power/compute demand. ). The missing piece for Apple is the more cloud centric , heavier resource model. The better ones of those outside the Apple space are usually paywalled. ( how Apple is going to do heavier model for 'free' long term I'm not sure).

 

[deconstruct60]

People who keep saying there's an "AI bubble" don't know what they're talking about.

Refer to Taiwan Semi's earnings report yesterday. They cannot meet all the demand they're seeing. There's so much demand that they're increasing their 2026 capital expenditures by up to 40% vs 2025's capex to meet all that demand.

Musical chairs works up until the music stops. Pointing at TSMC revenues is misdirection.

Nvidia giving money to AI engine X to buy they stuff is circular funding. Similar with the circular OpenAI agreements ( invest and then you consume X ). OpenAI talking about buidling their own fabs because would need to outstip world demand. .... that 'bubble' worthy. It is lots of 'smack' talking. There is no rational foundation there if actually look at the numbers.

Is Apple paying people to buy iPhones? Nope. Customers want to buy with their own money.


OpenAI buying up 40% of the all the DDR5 wafers when they don't actually make (or contract to make) any substantive hardware. That makes sense? OpenAI purposely didn't tell SkHynix and Samsung they were doing the deal wit hthe other at those level because they would know it didn't make any sense ( and probably would not want to piss off most of their other customers who would get screwed. .

Pragmatically TSMC has to build new fabs to get to new fab dimensions anyway. So buying new stuff isn't particularly AI. Part of TSMC capex expansion is 'tariff' driven as much as AI. That is a bubble that could implode on the next Supreme Court decision disclosure window.

Intel was going to spend way more capex and have a fab working in Ohio by 2027... That got dialed back real quick as Intel ran out of money. TSMC can roll back a substantive portion of that long term capex relatively easily.

 

[rizzo41999]

Not exactly good for the revenue model if iPhone accounts for 50% of total rev in FY25. Uh oh, Tim.

 

[jarman92]

Can Intel do the entire scope of Apple production? No. But neither can Apple move all of it there quickly either. A17,A18,A19 prodution isn't going to move to Intel even if Intel had fully equipped factories ready to go. Legacy silicon isn't going to be redesigned to get onto a new process at deep discounted prices.

So what is there for Intel to make, if they can't make legacy Apple silicon and certainly can't make cutting-edge chips?

 

[jarman92]

Everything will be digitized, virtualized, tokenized, and controlled and monitored by AI in global planetary power sucking data centers run by Oracle, Meta, Google, Microsoft, Apple and Amazon. Entire governments and other military and intelligence apparatus are now or will be nearly to wholly run on one or more of these companies’ platforms.

Until the bubble bursts and causes a global economic catastrophe that makes the Great Depression look like a minor inconvenience.

 

[JDHiro]

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.

I mean, that's exactly what ChatGPT, Google, Anthropic, etc want you to do. They want you to use your computer as a dumb device, and buy their AI cloud services for eternity.

What *I* want to do is upgrade to systems where I can run my AI locally, and give these guys stealing our data the middle finger.

 

[Ethosik]

Ah love to see the people say Apple is immune to what is going on. Nobody is. NVIDIA + Microsoft + Meta + OpenAI > Apple.

 

[jarman92]

They cannot meet all the demand they're seeing. There's so much demand that they're increasing their 2026 capital expenditures by up to 40% vs 2025's capex to meet all that demand.

This is the problem—there's "demand" but it's illusory, driven by rank speculation and circular investment deals with the equivalent of Monopoly money. As just one example, Nvidia claims to have "sold" more GPUs than could possibly be used in extant data centers or powered by the current global electrical grid. And, as of now, there's no evidence that this investment will ever generate profit. Peruse Ed Zitron's writings for more on this.

 

[Ethosik]

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

Every other big tech is throwing billions at this like it’s a nickel. They will throw money to break contracts.

Microsoft now has more hardware than we have power in the US to turn it on.

 

[Ethosik]

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).

What competitor? The only viable competitor to Mac is Windows (I can’t get native support from Adobe when running Linux). And Windows is even more horrible now than ever before.

Just using Adobe as an example. I have many other software that is macOS and Windows NOT Linux. I regularly deal with support from these companies.

 

[GuruZac]

Apple’s current trajectory feels like the rise and fall of empires. This era feels like we’re in the fall period. Stagnant design, stagnant innovation, bloated buggy software across hardware. Tim did an excellent job generating revenue but the brand feels very stale these days. Of all the products I own, my Watch Ultra is my favorite, least buggy, nicest design.

 

[Hogswarts]

The effect of "AI" on RAM and SSD prices is also sickening. And don't forget their insatiable demand for electricity and water.

 

[Antilogical]

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...

And I'm sure if Tim is the supply chain wizard everyone says he is, he will be just as effective if not more so doing that job full-time from a more focused position without having to also concern himself with all the other facets that are involved in being a CEO.

It's time for a fresh face of leadership that values hardware, software quality, and bold innovation again.

 

[tomtad]

Thank you Jensen, go eat a shoe

 

[Hogswarts]

What *I* want to do is upgrade to systems where I can run my AI locally, and give these guys stealing our data the middle finger.

Just the hardware for that is so far away from being cost-effective and affordable for virtually anyone, it isn't funny.

 

[.wojtek]

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

you wanted to say "Apple Inteligence" - right? ;-)