<story><title>TSMC “Apple-first” 3nm policy leads to AMD and Qualcomm mutiny</title><url>https://www.club386.com/tsmc-apple-first-3nm-policy-leads-to-amd-and-qualcomm-mutiny/</url></story><parent_chain><item><author>rob74</author><text>They don&amp;#x27;t have to buy TSMC a fab, they simply have to pay (slightly) more than other TSMC customers - and Apple with its uniquely high margins can afford to do just that. Of course, depending on other details of the contract (such as guaranteeing certain volumes, which Apple can also do much more easily because they use the chips themselves), they don&amp;#x27;t even have to pay more to be TSMC&amp;#x27;s preferred customer.&lt;p&gt;Actually I would put the blame squarely on AMD and Qualcomm for making themselves dependent on TSMC  - especially AMD who have turned themselves into a &amp;quot;fabless manufacturer&amp;quot; and are now experiencing the consequences...</text></item><item><author>GeekyBear</author><text>Apple has a long history of buying their suppliers a production line in return for guaranteed production levels, going back to the start of the Tim Cook era.&lt;p&gt;An early example.&lt;p&gt;&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.apple.com&amp;#x2F;newsroom&amp;#x2F;2005&amp;#x2F;11&amp;#x2F;21Apple-Announces-Long-Term-Supply-Agreements-for-Flash-Memory&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.apple.com&amp;#x2F;newsroom&amp;#x2F;2005&amp;#x2F;11&amp;#x2F;21Apple-Announces-Lon...&lt;/a&gt;&lt;p&gt;A more recent example.&lt;p&gt;&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.reuters.com&amp;#x2F;article&amp;#x2F;us-apple-corning&amp;#x2F;apple-awards-iphone-supplier-corning-250-million-from-u-s-manufacturing-fund-idUSKBN1W217H&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.reuters.com&amp;#x2F;article&amp;#x2F;us-apple-corning&amp;#x2F;apple-award...&lt;/a&gt;&lt;p&gt;If you go back to the time when Apple was looking at single sourcing all their SOC production at TSMC, you&amp;#x27;ll see TSMC&amp;#x27;s CEO publicly saying it would make sense to dedicate a Fab to a single customer.&lt;p&gt;&amp;gt;The world&amp;#x27;s leading foundry chip maker Taiwan Semiconductor Manufacturing Co. Ltd. is considering operating single-customer wafer fabs, according to chairman and CEO Morris Chang.&lt;p&gt;&amp;quot;I think that they are going to be larger customers, and now it makes complete sense to dedicate a whole fab to just one customer and hold that – to hold fabs in fact to just one customer.&amp;quot;&lt;p&gt;&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;web.archive.org&amp;#x2F;web&amp;#x2F;20120728040723&amp;#x2F;https:&amp;#x2F;&amp;#x2F;www.eetimes.com&amp;#x2F;electronics-news&amp;#x2F;4391104&amp;#x2F;TSMC-says-single-customer-fabs-make-sense&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;web.archive.org&amp;#x2F;web&amp;#x2F;20120728040723&amp;#x2F;https:&amp;#x2F;&amp;#x2F;www.eetim...&lt;/a&gt;&lt;p&gt;I think the reason that Apple is always first in line at TSMC is that they bought TSMC a Fab.</text></item></parent_chain><comment><author>mdasen</author><text>&amp;gt; they simply have to pay (slightly) more than other TSMC customers&lt;p&gt;I&amp;#x27;d argue that they need to pay &lt;i&gt;significantly&lt;/i&gt; more than other customer in order to get such preferential treatment.&lt;p&gt;In a short-sighted view of things, you only need to pay slightly more. If AMD is willing to pay $1 and Apple is willing to pay $1.01, you make more profit selling to Apple. However, as this article shows, you might end up losing the other business if you offer Apple such preferential treatment. If Apple isn&amp;#x27;t going to use all of your capacity year-round, you don&amp;#x27;t want to alienate the other companies whose orders you rely on.&lt;p&gt;I think Apple likely has to pay a significant premium for getting access to the latest and greatest to the detriment of competitors. It&amp;#x27;s not in TSMC&amp;#x27;s interests to become too dependent on Apple. If AMD and Qualcomm mutiny and their orders start boosting Samsung&amp;#x27;s foundries with more money for R&amp;amp;D, TSMC could find itself 1) competing against a better-funded Samsung foundry; 2) with one customer that now has leverage over TSMC and getting paid less.&lt;p&gt;If AMD and Qualcomm move all their orders to Samsung, it provides Samsung with the money to reinvest in its chip business. If they&amp;#x27;re able to make long-term commitments to Samsung, that&amp;#x27;s bad for TSMC since it will allow Samsung to invest knowing it will make a profit (just as TSMC has been able to do that with Apple&amp;#x27;s commitments).&lt;p&gt;Likewise, if the two other giant chip design companies move to Samsung exclusively, that leaves TSMC in a tough negotiating position with Apple. Before, Apple would have to compete against AMD and Qualcomm for capacity. Now if AMD and Qualcomm have made long-term commitments to Samsung, TSMC becomes really reliant on Apple and Apple will know that TSMC has capacity they can&amp;#x27;t sell elsewhere. Sure, MediaTek and others exist, but it swings the power away from TSMC and toward Apple. Let&amp;#x27;s say that Apple was using 40% of TSMC&amp;#x27;s capacity, AMD 25%, Qualcomm 25%, and MediaTek 10%. Now AMD and Qualcomm make long-term commitments to Samsung. Apple knows that TSMC&amp;#x27;s orders have dropped 50% and that gives Apple a lot of power.&lt;p&gt;Giving Apple the best to the detriment of AMD, Qualcomm, and others is a risky play for TSMC. They&amp;#x27;ll definitely want to be getting very well compensated for it, not merely slightly more. They&amp;#x27;ll want to make sure that what Apple is offering is enough to offset the substantial risk of angering competing chip design companies who might look for fabs elsewhere.</text></comment>
<story><title>TSMC “Apple-first” 3nm policy leads to AMD and Qualcomm mutiny</title><url>https://www.club386.com/tsmc-apple-first-3nm-policy-leads-to-amd-and-qualcomm-mutiny/</url></story><parent_chain><item><author>rob74</author><text>They don&amp;#x27;t have to buy TSMC a fab, they simply have to pay (slightly) more than other TSMC customers - and Apple with its uniquely high margins can afford to do just that. Of course, depending on other details of the contract (such as guaranteeing certain volumes, which Apple can also do much more easily because they use the chips themselves), they don&amp;#x27;t even have to pay more to be TSMC&amp;#x27;s preferred customer.&lt;p&gt;Actually I would put the blame squarely on AMD and Qualcomm for making themselves dependent on TSMC  - especially AMD who have turned themselves into a &amp;quot;fabless manufacturer&amp;quot; and are now experiencing the consequences...</text></item><item><author>GeekyBear</author><text>Apple has a long history of buying their suppliers a production line in return for guaranteed production levels, going back to the start of the Tim Cook era.&lt;p&gt;An early example.&lt;p&gt;&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.apple.com&amp;#x2F;newsroom&amp;#x2F;2005&amp;#x2F;11&amp;#x2F;21Apple-Announces-Long-Term-Supply-Agreements-for-Flash-Memory&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.apple.com&amp;#x2F;newsroom&amp;#x2F;2005&amp;#x2F;11&amp;#x2F;21Apple-Announces-Lon...&lt;/a&gt;&lt;p&gt;A more recent example.&lt;p&gt;&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.reuters.com&amp;#x2F;article&amp;#x2F;us-apple-corning&amp;#x2F;apple-awards-iphone-supplier-corning-250-million-from-u-s-manufacturing-fund-idUSKBN1W217H&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.reuters.com&amp;#x2F;article&amp;#x2F;us-apple-corning&amp;#x2F;apple-award...&lt;/a&gt;&lt;p&gt;If you go back to the time when Apple was looking at single sourcing all their SOC production at TSMC, you&amp;#x27;ll see TSMC&amp;#x27;s CEO publicly saying it would make sense to dedicate a Fab to a single customer.&lt;p&gt;&amp;gt;The world&amp;#x27;s leading foundry chip maker Taiwan Semiconductor Manufacturing Co. Ltd. is considering operating single-customer wafer fabs, according to chairman and CEO Morris Chang.&lt;p&gt;&amp;quot;I think that they are going to be larger customers, and now it makes complete sense to dedicate a whole fab to just one customer and hold that – to hold fabs in fact to just one customer.&amp;quot;&lt;p&gt;&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;web.archive.org&amp;#x2F;web&amp;#x2F;20120728040723&amp;#x2F;https:&amp;#x2F;&amp;#x2F;www.eetimes.com&amp;#x2F;electronics-news&amp;#x2F;4391104&amp;#x2F;TSMC-says-single-customer-fabs-make-sense&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;web.archive.org&amp;#x2F;web&amp;#x2F;20120728040723&amp;#x2F;https:&amp;#x2F;&amp;#x2F;www.eetim...&lt;/a&gt;&lt;p&gt;I think the reason that Apple is always first in line at TSMC is that they bought TSMC a Fab.</text></item></parent_chain><comment><author>WithinReason</author><text>Arguably becoming fabless and manufacturing at TSMC is what brought AMD its edge over Intel and its recent success.</text></comment>