What about Apple starting up their own factories then? They got enough money to do it themselves.
They can buy up all the talent from TSMC no problem.
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Apple Reportedly Refuses to Accept TSMC Chip Price Hike
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What about Apple starting up their own factories then? They got enough money to do it themselves.
They can buy up all the talent from TSMC no problem.
I think their chips are so precious now. They couldn't even keep up with the demand atm. It would probably only hurt them in the short run if their partnership falls off, but Apple on the other hand wouldn't find anyone who could produce better chips for them at that price.
I think another aspect of Apple that people tend to underestimate is their ability to control component costs. I believe Apple is extremely influential when it comes to dictating terms and pricing to suppliers, and this article is simply another example of how Apple is able to assert their market power to hold the line on costs in an inflationary / supply-constrained environment.
Apple might be open to absorbing a small amount of the price increase that TSMC is attempting to push through (depending on how negotiations go), but I suspect it will be TSMC who ends up having to absorb the bulk of it.
They kind of do need Apple though. They’re one of the only companies with investments large enough to make the leading edge nodes economically viable to to in the first place.
Other big players pulled out of their orders for the first round of 3nm production *which is why the cost per wafer to produce has gone up*. This news story is the direct result of those players pulling out.
It costs 10’s of billions of dollars in capital investments to even get a new generation node plant stood up. Fabs can’t recoup those costs (and therefore continuing the march to physically build the next gen node) at an acceptable pace to their stockholders if the first wave of orders aren’t locked in to actual production contracts.
Without demand for the next gen, there is little *business incentive* to move forward when there are plenty of orders to produce the more profitable “old gen” nodes because the capital costs are *already* paid.
I think it's a good idea for Apple to try to source from multiple providers just to prepare for any potential for geopolitical concerns anyway. Not saying it's likely that there will be an issue, but it's certainly possible and it would be disastrous for Apple if they don't have contingency plans (it takes a while to take CPU design and to port it to work on another fab. They aren't exactly drag-and-drop).
That being said, if power efficiency is a concern, TSMC is so far ahead of the rest that it sort of makes none of the others even really feel viable. Given a few years, I'm sure there will be competitors who have caught up, that's more or less the nature of the fab business. It's very competitive and there's a different winner every era. But if I were in charge of logistics, I'd probably be employing Samsung at least for some of the iMacs and desktops, where having 20% of extra power consumption (pulling a number out of thin air, but it's probably in that ballpark) wouldn't be that huge of a deal.
Apparently folded ....
www.tomshardware.com
A "3% to 5%" increase in the context of current average inflation ( not sure what it is in Taiwan but very likely isn't 1-2% ) really isn't that much of a huge money grab. It is far more about Apple being Scrooge McDuck trying to squeeze as much profit as possible out of the chips sold. And also likely trying to push the pricing genie back into the bottle on the hopes that an upcoming demand 'bust' cycle will move them back down.
TSMC Reportedly Overpowers Apple in Negotiations Over Price Increases
It's good to be on top.
A "3% to 5%" increase in the context of current average inflation ( not sure what it is in Taiwan but very likely isn't 1-2% ) really isn't that much of a huge money grab. It is far more about Apple being Scrooge McDuck trying to squeeze as much profit as possible out of the chips sold. And also likely trying to push the pricing genie back into the bottle on the hopes that an upcoming demand 'bust' cycle will move them back down.
No. they don't have enough money.
First,
" ...
Balance Sheet
| Total Cash (mrq) | 48.23B |
| Total Cash Per Share (mrq) | 3 |
| Total Debt (mrq) | 119.69B |
Apple Inc. (AAPL) Valuation Measures & Financial Statistics
Find out all the key statistics for Apple Inc. (AAPL), including valuation measures, fiscal year financial statistics, trading record, share statistics and more.
finance.yahoo.com
For years Apple ran a scheme where they borrowed money to pay out dividends and do stock buy backs because it lowered their tax bill even further ( it is tax shelter scheme. Legal but still a scheme) . Folks looked at the "Total Cash" line without looking at the Total Debt Line. [ about 10+ years ago before they got into the high dividends game and cashing as high as possible stock price as a primary objective Apple had $0.00 in debt. None. ]
Also once bond rates go high enough that scheme doesn't make much sense. Apple had to hoard cash to get cheaper bond rates to keep the tax shelter afloat.
That means they really don't have "free" cash there if it is implicitly allocated to lowering their borrowing costs. With generally higher borrowing costs some of that 'reserved' cash it going to have to go out in bond redemptions. (instead of re-floating more debt on each cycle. )
Apple isn't going broke any time soon. However, they don't have "spend money like a drunken sailor on shore leave" money . To some extent they already have the 'Black hole' car project soaking up money. They have a $1B cellular modem acquisition that is shipping lots of nothing.
Second, the bigger issue is that Apple can't actually buy the tools to build a modern "4nm"/"3nm" factory. Not that they would want to own a factory anyway ( Apple doesn't actually make computers either. So why would they want to make one of the subcomponents of a computer. Again that strategy buys them a higher stock price because the don't have to do much capital expenditure on factory assets. ) . There is only one EUV fabrication system vendor in the world: ASML. They are back ordered years for new units. Each one of those units goes for $500M a unit. Apple would need more than several. For Apple to outbid their way to the front of the line in a significant way would drive the coast of a factory way higher than what TSMC is charging ( who already have the equipment.
this is part one reason why Intel is doing their dGPU dies at TSMC. Intel just doesn't have enough EUV equipment to both high volume CPU dies and moderate volume GPU dies. They dramaticcally under invested in buying current generation EUV equipment and there is no way to catch up fast there. TSMC and Samsung have more than half the contracts for every available unit coming off the line for a couple of years.
Nope to that also. Not sure why anyone in the highest end fabrication game would want to work for Apple. The only viable path in that mark over the next 5-10 years is to do work for multiple different design teams on multiple products so that the extremely high costs can be amortized out over a wider base of products. Apple adopting the old Intel "in house only" model from 20 years ago would likely end in failure over the long term. So not sure why someone would want to buy a ticket on the Titanic.
Intel themselves are dumping that model. Why Apple would want to move to it is a head scratcher.
climate change is also partially responsible for the chip shortage:
www.bbc.com
In 2021, Taiwan had its biggest drought in 56 years...
Why the world should pay attention to Taiwan's drought
The island has tried everything from cloud seeding to prayer during its worst drought in 56 years.
www.bbc.com
This is what most consumers are choosing to do.
You could have purchased a fuel-efficient vehicle several years ago rather than the best sellers which consume a lot of fuel.
Groceries are more challenging but there are often substitutes that cost less but may require more preparation time.
I have the feeling that demand for tech products is dropping pretty fast and will accelerate into 2023.
Consumer tech in the conspicuous consumption zone perhaps. Business Tech not as much. Government attacks on external pricing caps and windfall profits tax only squeezes margins thinner. Not going to be looking for lower productivity output, but higher. 'Work from home' is more tech intensive. Two humans standing next to the water cooler talking to each other requires no tech. Spread them out 60 miles and it does. Significantly large and very broad increases in minimal wages thresholds is going to be bring more robots (tech) or at least minimally more productive employees ( probably assisted in speed with more tech).
There is a drop in tech out of the pandemic forced 'manic' buying. Buy every student a laptop , Buy components for a 3M ventilators. Cryptocraze GPU buying for coin mining. But dropping far below 2017- mid 2019 levels.... not so much especially as go further into 2023 and 'python has had time to digest the pig'. (except for the mania over dGPU coin mining. The fundalmentals there has drastically changed and it isn't 'inflation' or 'recession'. That is tech moving on. )
Demand for wafer starts at TSMC is not about to completely collapse at TSMC any time soon or throughout 2023.
There will be better match for supply & demand , but not a deep collapse.