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Apple's Bid to Use Chinese Chipmaker as Leverage Backfires
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The OP said that "Apple has hundreds of billions" - which is what I corrected and you are merely confirming. I am well aware of Apple's market cap (which changes daily) and its credit rating and, therefore, never claimed that Apple couldn't easily build its own memory factory. What I did say is that Apple clearly doesn't think this makes economic sense. If it doesn't make sense for the most critical part of any Apple device - the CPU - it makes even less sense for RAM.
And what you say about Apple bringing everything silicon under their roof is nonsense. They're bringing the *design* of everything silicon under their roof - but that has always explicitly excluded the final step - manufacturing! Your example of Qualcomm proves my point: Sure, they now design their own C1 and C2 processors - but they're not building them in a factory! That is still done by TSMC!
reyesmac
macrumors 65816
If they weren’t making so much money off overpriced ram upgrades before they would have developed an os that uses LESS RAM than the competition. They need to get on that asap. That would ultimately help their other devises as well. An os that could easily handle many apps on 8gb ram would be useful. The NEO should run like 16gb or 24gb Mac. If they could develop such a way to do that they could save money on ram no matter how expensive it is.
Last time I checked $150b is not "hundreds of billions". And, besides, cash and cash-equivalent is only $39b. It's unknown how much they'd get for the non-cash items in a year. But neither of these was my central point: Apple doesn't think building their own fab for CPU makes economic sense and the CPU is the core of their IP. They let TSMC distribute the enormous CapEx of building one (and the future ones needed!) across all its clients. The same hold true for RAM. Why should it build its own RAM factory - and do it again and again as miniaturization requires it? It makes zero financial sense when they can let RAM manufacturers do the same thing TSMC is doing for their CPUs.
Johnny907
macrumors 68030
Oh there’s a shortage, it’s just artificially being created, hence the anti-trust lawsuits. 👍
Reason077
macrumors 601
This explanation doesn’t make much sense, as DRAM prices are currently demand driven, not dictated by a cost floor.
An analogy is the oil industry: it might cost one producer $10/barrel and another $30/barrel to produce the same oil. If oil sells on the market for $35/barrel then the $30 guy doesn’t have much room to manoeuvre.
But it doesn’t matter when oil is selling at $100/barrel. Everyone is happy and makes big profits. And right now, DRAM sells for far, far above the cost of production because the price is being inflated by insatiable demand.
Reason077
macrumors 601
Not really true.
TSMC Arizona is the most advanced semiconductor manufacturing complex in the world outside of Taiwan. As much as $265 billion is being invested into it, including billions in US government funding. Much of this is CHIPS Act funding that dates back to 2022.
Likewise, Intel's Fab 52 in Chandler, AZ is getting billions in direct federal funds, Defense department contracts, and the US government’s equity stake in Intel, to compete with TSMC’s most advanced fabs.
As for RAM, Micron remains one of the “big three” global DRAM manufacturers, and its market share has been growing recently. It’s pouring billions into new advanced facilities in New York and Idaho, again backed by billions in government funding.
What else do you want them to do?
btrach144
macrumors 68040
Agreed.
I think the whole thing reads as Korean memory makers feeding a fake story to the Korean press to try and meddle in Apple exploring other options.
I wanted them to start doing this during the Obama administration. CHIPS act was politicized as hell and still not cutting edge.
Better late than never. It's just dwarfed in comparison to what China and other countries have done. America was busy pursuing...other interests during that time apparently.
Backfires for whom? Apple already has plenty of good reasons NOT to use Chinese DRAM.
Seems like all this has done is convert a situation where these Chinese companies could have established a relationship that might have lasted many years, and helped them in the face of US sanctions or tariffs to a situation where these same companies get absolutely nothing.
So I'm failing to see a great strategic move here by China, more like a masks-off moment.
Seems like all this has done is convert a situation where these Chinese companies could have established a relationship that might have lasted many years, and helped them in the face of US sanctions or tariffs to a situation where these same companies get absolutely nothing.
So I'm failing to see a great strategic move here by China, more like a masks-off moment.
TigerNike23
macrumors 65816
It amazes me there are people here who think moving manufacturing back to the States is a feasible opportunity. It's so stupid, it's ridiculous.
Who here wants to pay $2750 for a base model iPhone 18 Pro? That's an optimistic view of what you're looking at with full American parts and labor.
Who here wants to pay $2750 for a base model iPhone 18 Pro? That's an optimistic view of what you're looking at with full American parts and labor.
Reason077
macrumors 601
Everything in government is politicized, of course. But the CHIPS Act was bipartisan! 2022 was a crazy time when the parties would actually work together to get laws passed for everyone’s benefit.
Sure, they certainly could have started earlier. But it’s definitely not correct to say the US has “never gotten any kind of advanced silicon manufacturing happening in the US since Intel was king”. It’s happening right now, and it won’t be too long before you can buy phones with advanced chips made in the USA.
QuarterSwede
macrumors G4
The real problem is that the US has lost the ability to manufacture at that level without bringing skilled labor into the US, which defeats a large part of the idea. The faster the US accepts the fact that they’ve moved on from manufacturing the better.
I think we remember 2022 very differently. And my point is that for better or worse the Chinese didn't seem to have that problem. They directed the investments. They got the results.
I certainly hope you are right about that. I agree that baby steps are finally being taken in the right direction when it may already be too late. But again, better late than never.
Lone Deranger
macrumors 68000
Play stupid games, win stupid prices, Apple.
Apple's been playing the bully for far too long. It is only inevitable that the tables will turn.
John Ternus will have his hands full, trying to clean up Cook's mess and patch over relations with the Korean suppliers. He should head over to Seoul and treat the local CEOs to some Chimec publicly followed by a lot of grovelling behind closed doors.
Apple's been playing the bully for far too long. It is only inevitable that the tables will turn.
John Ternus will have his hands full, trying to clean up Cook's mess and patch over relations with the Korean suppliers. He should head over to Seoul and treat the local CEOs to some Chimec publicly followed by a lot of grovelling behind closed doors.
"Services" are an abstraction that's based on a real reality. Thats the problem with businesses. If the underlying reality can't hold together than there's no abstraction. It doesn't matter how many services you have or their high prices if people can't get to them.
I've no idea what Steve Jobs talked about with Barack Obama, I wasn't there, and the provided link goes into detail with regards to Apple's sweat-shop practices in China, which isn't exactly news, but Steve Jobs tended to pivot quite often with regards to the roadmap ahead, and what should be done in the here and now.
During the NeXT era, before they got paid $400 million to essentially do a reverse takeover of Apple, and begin the greatest second act in the history of business (that I'm aware of), here's random Steve Jobs quotes on automated domestic manufacturing and his vision of "sand in one end -> NeXT computer out the other."
https://www.cultofmac.com/news/a-br...automated-factory-at-next-cook-book-leftovers
https://www.osnews.com/story/812/mac-market-built-on-sand/
He wanted full vertical integration down to control of localized manufacturing - what he got instead was Tim Cook as the supply chain guy.
Reason077
macrumors 601
In the most recent quarter, Apple reported services revenue of $30.7 billion, and total revenue of $109.42 billion. So services are about 28% of Apple’s business, a fraction of the revenue they get from selling hardware.
However, services tend to have much higher margins than hardware. Something like App Store commissions, for example, are almost pure profit for Apple. Where as hardware costs real money to make.
For two decades we got this story that China and BRIC gonna take over any day now.
They are all utterly dependent on the American consumer who loves burning gas and buying cheap clothes made in Asia.
Nothing is going to change that. BRIC is a big nothing burger. The B, R, I and C don’t even really like each other.
Doomtomb
macrumors 6502a
Then do not complain when prices go up or Apple cannot get the DRAM they need at the price they want which is the whole point of the article.