TSMC “Apple-first” 3nm policy leads to AMD and Qualcomm mutiny

GeekyBear · 10 days ago

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.

An early example.

https://www.apple.com/newsroom/2005/11/21Apple-Announces-Lon...

A more recent example.

https://www.reuters.com/article/us-apple-corning/apple-award...

If you go back to the time when Apple was looking at single sourcing all their SOC production at TSMC, you'll see TSMC's CEO publicly saying it would make sense to dedicate a Fab to a single customer.

>The world's leading foundry chip maker Taiwan Semiconductor Manufacturing Co. Ltd. is considering operating single-customer wafer fabs, according to chairman and CEO Morris Chang.

"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."

https://web.archive.org/web/20120728040723/https://www.eetim...

I think the reason that Apple is always first in line at TSMC is that they bought TSMC a Fab.

rob74 · 10 days ago

They don'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't even have to pay more to be TSMC's preferred customer.

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 "fabless manufacturer" and are now experiencing the consequences...

mdasen · 9 days ago

> they simply have to pay (slightly) more than other TSMC customers

I'd argue that they need to pay significantly more than other customer in order to get such preferential treatment.

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't going to use all of your capacity year-round, you don't want to alienate the other companies whose orders you rely on.

I think Apple likely has to pay a significant premium for getting access to the latest and greatest to the detriment of competitors. It's not in TSMC's interests to become too dependent on Apple. If AMD and Qualcomm mutiny and their orders start boosting Samsung's foundries with more money for R&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.

If AMD and Qualcomm move all their orders to Samsung, it provides Samsung with the money to reinvest in its chip business. If they're able to make long-term commitments to Samsung, that'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's commitments).

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't sell elsewhere. Sure, MediaTek and others exist, but it swings the power away from TSMC and toward Apple. Let's say that Apple was using 40% of TSMC's capacity, AMD 25%, Qualcomm 25%, and MediaTek 10%. Now AMD and Qualcomm make long-term commitments to Samsung. Apple knows that TSMC's orders have dropped 50% and that gives Apple a lot of power.

Giving Apple the best to the detriment of AMD, Qualcomm, and others is a risky play for TSMC. They'll definitely want to be getting very well compensated for it, not merely slightly more. They'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.

ricw · 9 days ago

Apple is 20% of TSMCs revenue. That’s enough to make such demands. On top of that they’re likely also paying top dollar.

TrainedMonkey · 9 days ago

Not sure I totally buy your point, but it does sound interesting/intriguing enough for an Asianometry video: https://www.youtube.com/c/Asianometry/videos

WithinReason · 10 days ago

Arguably becoming fabless and manufacturing at TSMC is what brought AMD its edge over Intel and its recent success.

totalZero · 9 days ago

The reason AMD went fabless had nothing to do with edge. It was a move to prevent bankruptcy. Intel fell behind because of its process woes and managerial issues. They weren't outworked, they played themselves.

to11mtm · 10 days ago

Yeah this one is hard to look at, especially because for a while it looked like it was a very bad move for AMD. In retrospect it was still a kinda bad contract for them for a while (IIRC, GloFo couldn't deliver on process for Bulldozer, which led to poor yields/heat/etc, killing demand, but AMD had contracts with GloFo stipulating penalties for not hitting certain order numbers.)

But at the same time, they were then unshackled as you said; As time went on and they could move more volume to TSMC it wound up helping them out immensely.

It's kinda worth remembering too though, that even at their 'peak' in the early 2000s AMD was 6-12 months behind Intel on process tech if you go by releases. Given the trouble Intel has had keeping up one could only imagine where AMD would be now.

cptskippy · 10 days ago

I don't think there's any debate. GloFo abandoned 7nm research 3 years after TSMC shipped. TSMC has since pushed out 6nm and 5nm while GloFo is just languishing in 12/14nm.

agumonkey · 10 days ago

It was a difficult seat to be in and they managed to use what they had extremely well. Let's see how they fare now.

GeekyBear · 10 days ago

> They don't have to buy TSMC a fab

They don't have to, but buying production equipment for their manufacturing partners (in return for guaranteed pricing and production levels) is the norm at Tim Cook's Apple.

ksec · 10 days ago

Is the norm for Tim Cook's Operation ( both before and after Steve Jobs ) at Foxconn. Or more specifically industrial design and manufacturing.

Apple dont buy production equipment for TSMC, or Samsung Foundry. Zero.

toast0 · 10 days ago

> 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 "fabless manufacturer" and are now experiencing the consequences...

The consequences being if you don't like what your fab is up to, you can switch fabs. Doesn't sound too bad. GlobalFoundries, the former AMD fab, has all but given up on smaller nodes at this point, but AMD switched to TSMC for CPUs and a mix of TSMC and Samsung for GPUs. On the other hand, Intel had problems with their fab for several years, and is only now starting to consider using other fabs, when their process seems to be starting to work.

Yes, designing chips to fabricate on different lines is more work, but it's something AMD has intentionally done and it has benefits over running your own fab, especially when your own fab has trouble with node shrinks.

myohmy · 9 days ago

Eh, the business world isn't as simple as Econ 101. Personal and business relationships matter. Risk matters quite a bit too. Which is why strategic partnerships happen between large businesses.

acdha · 9 days ago

> They don'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.

It's not as simple as high margins but controlling most of the stack. If all Apple was doing was charging more, we'd see comparable quality devices at lower cost but we don't and it's not uncommon for e.g. a Samsung flagship to cost more despite being slower (or narrowly beating the previous generation, depending on launch timing). What we're seeing instead is that Apple has both consistent goals on their execution (e.g. not Google and Qualcomm working at cross-purposes which make sense for their individual businesses) and captures more of the revenue.

That's a lot harder to catch up with and gives Apple consistent enough revenue that they can do things like effectively floating TSMC a great loan or pay more per unit since they don't need to justify it based on the profits from a single layer. Dell can't pay for their processor R&D using the money you spend on Spotify or Steam.

JeremyNT · 9 days ago

Indeed, this is the obvious risk of allowing a TSMC monopoly, and its "fabless" customers have little justification for complaining.

AMD is not the savior here, nor any other TSMC customer. Intel completely squandered its lead, and now we really need to hope they can catch up and remain competitive. We shouldn't allow TSMC to take total control of the market.

Klinky · 9 days ago

I don't think they would only need to pay slightly more. It is a bad move to be entirely dependent on a single customer to the detriment of your other customer relations. To gain exclusivity there would likely need to be a significant premium paid and minimum order commitments.

desiarnezjr · 9 days ago

They're not though. There are still many fabs available, just not the premium ones. It's up to every other company that wants those seats to pony up and do what they need to do to get that capacity.

It's like a restaurant reservation for a very regular "VIP" customer. They may get really special treatment, because they're probably spent enough to earn it. And everyone else schleps in line.

Really there's nothing wrong with that. It may be annoying, but someone is paying way more and consistently for that table.

thamer · 9 days ago

I've always found the story of the webcam indicator shining through metal to be fascinating.

On MacBook laptops from ~2011, a green light would indicate when the webcam was in use. But the magical part of this was that when it was off, you couldn't see the LED at all, so it looked like this light was shining through the metal bezel at the top. This was achieved by drilling extremely small holes in the frame above the LED, small enough that they're barely visible without magnification but having enough of them that light can easily pass through. It's a striking effect, if you notice it.

To do this, they apparently bought so many high-precision lasers just for this feature that it created a shortage for other companies that needed them: https://www.bloomberg.com/news/articles/2011-11-03/apples-su...

danudey · 9 days ago

Googling isn't finding the story, so take this with a grain of salt, but as I recall there have been incidents where Apple needed so many of a specific machine, made by one specific company, to set up their manufacturing, but when they couldn't get enough delivered on time they bought the company outright.

(Presumably this would help by giving them access to the IP so they could contract other factories to manufacture them as well, since Apple has the up-front cash to do it)

Again, I can't find the article so who knows if it's true, but it sounds very, very Apple to do that.

discordance · 9 days ago

A bit dated now, but still a good analysis by Horace Dediu on Apple’s machinery expenditure here:

http://www.asymco.com/2011/10/16/how-much-do-apples-factorie...

sangnoir · 9 days ago

There was also a small glass/saphire company that agreed to sell exclusively to Apple, they had to innvest a lot of money to increase capacity, and in the end, Apple decided to continue using Gorilla glass, and the company went under.

MBCook · 9 days ago

That sounds very familiar. I think they might’ve done it to source the milling machines used when they switched to the unibody MacBook pros?

throwawaymanbot · 9 days ago

I remember Jonny Ive mentioned this and how he was proud to have designed it.

wingspar · 9 days ago

I recall they used the laser holes for the power light in the front of those MacBooks. The led ‘breathes’ (fading in and out) when the computer is ‘asleep’

Telemakhos · 9 days ago

Yes, and it is gorgeous. I still have my 2012 MacBook Pro with this light in the front. I've upgraded to the M1 MBP, but the 2012 model still runs beautifully almost ten years later.

rasz · 9 days ago

There was also a meme about Apple buying 10K CNC machines for unibody manufacturing. Probably exaggerated by one order of magnitude, but still substantial.

fomine3 · 10 days ago

What Apple did for Japan Display is interesting. They invest to build new JDI Hakusan factory for iPhone LCD but they were going to transitioned to OLED as a result. Then the factory become debt. https://www.strategyanalytics.com/strategy-analytics/blogs/c...

rasz · 9 days ago

Its actually going back to at least Jobs return to Apple in 1997. Apple financed Wifi card production line for their modem supplier in Taiwan:

https://www.youtube.com/watch?v=Tj5NNxVwNwQ Arthur W. Astrin, sort of father of WiFi, hired by Apple to develop and incorporate 802.11b into their products. Spend most of 1998/99 flying West Coast-Taiwan twice a week (coordinating iBooks/iMacs manufacturing).

Made HP very happy:

>so I called up HP and I said "I need a spectrum analyzer. It needs to be at least three gigahertz,", and it would be nice if it was programmable. So, they whipped up something and next day the salesman shows up with this.. they call it HP Basic Language Computer. So we built 1, 2, then we ordered 10 then 50. All of a sudden HP started coming. The salesman became my best friend. <Laughs> In fact, I think I was the largest order that year for the spectrum analyzer at HP

We are talking small car unit prices here.

Afaik they did the same for iPhone camera modules with Primax, who went from small time accessories and gadgets manufacturer to one of Taiwan titans.

thevagrant · 9 days ago

It goes back to the iPod days.

Apple used to buy up the flash memory in advance. Leaving competitors to pay more for smaller yield or inferior quality.

It doesn't always work. Apple once invested a huge amount in making sapphire glass for their watches. I can't remember the company name but they failed completely at delivering to Apples required spec and the deal was scrapped (leaving the supplier to face massive debts).

reaperhulk · 9 days ago

GT Advanced Technologies (https://www.sec.gov/news/press-release/2019-66 SEC went after them in 2019)

inasio · 9 days ago

I had a chat with an engineer that was building apple stores (the big anchor ones). The stone for the walls came from a quarry that was fully bought by apple, apple people would go there to select the stones that had the quality they wanted and use those.

Someone · 10 days ago

Yes, it is capitalism at work. Whomever pays more, decides.

Apple says something along the lines of “we guarantee to buy x million chips this year, y million next year. We know it’s expensive to build that capacity, so here’s a few billion up front”.

That’s an offer few can make and nobody else is willing to make.

_ph_ · 10 days ago

The big point indeed is, that Apple pays in advance to finance the buildup of the production facilities. Of course they get the first access at the output as a consequence.

donny2018 · 10 days ago

That’s reasonable, I guess. If that is “capitalism” (with negative connotation) then what is more fair alternative to this?

smoldesu · 10 days ago

Does that not qualify as a monopoly? No other company in the world has the amount of liquid cash Apple does, so if there really are informal arrangements like this I'd expect them to be heartily scrutinized at their next antitrust hearing.

ivoras · 9 days ago

Would that move make TSMC's CEO less like a CEO of an independant company and more like Apple's VP of chips?

xyzzy_plugh · 10 days ago

This is really nothing new. Apple has been playing this game for years, ask anyone who shared an adjacent floor with Apple in Foxconn in the last decade.

Whether it's unibody aluminum milled frames, bleeding edge injection molding, glass, silicon...

It's done nothing but good for Apple to be aggressive and as vertical without owning the manufacturer as possible. Some of their processes are _years_ ahead of what anyone else can get their hands on, because they buy all the equipment, lease all the floors, and just throw money around like it's nobody's business. AMD and certainly Qualcomm can't touch em.

jeswin · 10 days ago

> Some of their processes are _years_ ahead of what anyone else can get their hands on

They are about a year ahead on CPUs. But pretty much everything else (screens, camera sensors, battery) has been on a par with, or behind what everyone else is doing.

hinkley · 10 days ago

Uh, no?

When they moved away from unibody laptops they did so by introducing friction-stir welding. That was hot tech on Boeing airplanes at the time. Some of those Boeing patents are still active.

2muchcoffeeman · 10 days ago

I think I’m terms of pure features that most people care about, other manufacturers are on par.

But Apple products tend to have some really interesting manufacturing or technology. Machining steel for the iPhone 4, FSW, putting an Xbox Kinect into the notch, LiDAR, making edge to edge screens without a chin, custom silicon.

Most of this is easily replaced or omitted because it doesn’t really matter much to the end user.

danuker · 10 days ago

> unibody laptops

You mean the "unibody" made of two sheets of aluminum glued together in a way that the heat unsticks the adhesive?

https://www.youtube.com/watch?v=t7XSckjRPo0

toiletfuneral · 10 days ago

I have to push back on this…apple shipped high dpi screens before windows could even manage to support anything above 72dpi

georgeburdell · 9 days ago

Eh I can think of many areas where Apple is behind its competitors pretty handily. Samsung has more advanced display tech, for example (OLED, integrated touch, polarizer-free, etc.)

jiggawatts · 9 days ago

Which is the exact same display in my iPhone, made by Samsung.

thevagrant · 8 days ago

Usually the areas where Apple are behind are for simple reasons:

Competitor is using new unproven tech. Apple decided to wait.

Apple can't use new tech due to supply constraint (new tech supplier can't make enough to supply Apple).

Apple decided that new tech doesn't offer enough competitive advantage vs profit made selling old tech (720p camera vs 1080p camera).

ngcc_hk · 9 days ago

Remember those days when you cannot have a larger screen … steve sometimes is a double edge sword.

Whilst the party lasted for apple it can buy the world. But would it last. We have to see. Hence saying it is a monopoly is totally off.

1cvmask · 10 days ago

This seems to me a replay of when Apple bought out all the capacity of Toshiba hard drives to that effectively blocked other MP3 players from emerging:

https://en.wikipedia.org/wiki/IPod

https://9to5mac.com/2021/10/23/20-years-ago-today-ipod-chang...

jeromegv · 10 days ago

Was it to block competitors, or was it because they were selling millions of iPod and needed all the capacity they can get? The iPod was not first to market and that Toshiba HD was available before but nobody was ordering it in any kind of significant quantity.

yareally · 10 days ago

Probably a little bit of both.

megablast · 10 days ago

How can it be both.

They either needed that many because they were selling that many.

Or bought way more to stop others from buying.

JiNCMG · 9 days ago

No one was demanding those hard drives, Toshiba was close to shelving it before going into production. Jon Rubenstein convinced Steve Jobs to invest in them for the music device they were building and 8 million was given to Toshiba so they can start producing these drives.

rkangel · 10 days ago

Not saying you're wrong, but an alternate interpretation was that Apple was just leveraging their large order size to get to the front of the line because they want to make products to sell. If you're TSMC, who are you going to favour - the large single customer who's guaranteeing order size over a period of time, or several smaller customers?

rzwitserloot · 10 days ago

Several smaller customers; anything else would be myopic.

General business intelligence: You do NOT want one of your 'verticals' (companies that you need to buy supplies from, or companies that you sell your product to) to turn monopolistic; after all, once they are a monopoly they can really squeeze you out.

This holds even if you are also nearing a monopoly or are an effective monopoly (in that you're the only one that can supply it at the quantity and quality required).

There are mitigating circumstances, but most of them don't look good for apple:

* TSMC is stupid. Don't knock it - I've seen companies go for the quick buck, then get killed by the monopolistic monolith they enabled and be surprised.

* TSMC laughs in the face of this and simply isn't taking an apple near monopoly on chips particularly seriously. I can definitely see that - the risk is presumably that apple gains massive increases in marketshare of PCs/laptops and smartphones, but TSMC presumably doesn't think it'll be so high as to risk the situation that TSMC can produce more chips than non-apple buyers could buy. In other words, that apple's total 'TSMC fab capacity' needs won't go anywhere near 50% of what TSMC is likely to ever be able to manufacture.

* Apple is putting pressure on TSMC. TSMC knows this is a risk and doesn't want to, but apple does want this to happen and is making some shady deals so that TSMC does the math and decided that the gains in dealing with apple exceed the losses*odds-it-will-happen of the squeeze if apple is a monopoly buyer for TSMC (as in, of dubious legality and certainly of questionable morality, but then, it's apple, a company. Waiting for companies to act morally is silly, you write laws and set up societal systems to incentivize them to do so instead, companies are amoral (not immoral - they just don't really know what it is, by design).

Your comment seems to suggest it's a smart move for TSMC to just sign one giant deal with apple and be done with it: You can send the lawyers and salesfolk to early retirement, get some money upfront, guarantee 100% sales of all your fab capacity with a party that is unlikely to renege or declare bankruptcy.

It's not. It's a dumb move. Either the C-level execs at TSMC are missing something pretty fundamental or more likely we don't know enough to realize that there's sufficient weights on the other side of the balance to counteract the downside of enabling the monopoly on verticals.

kergonath · 10 days ago

The whole post seems a bit myopic, to be honest. First, TSMC is more of a monopoly than Apple is (and ever will be as long as they don’t care about entry level consumer devices).

Then, Apple gets a temporary exclusivity on the new node (which they helped finance), but this leaves a lot of capacity on the older nodes. These processes are still really good, the vast majority of TSMC customers don’t care about being on the bleeding edge for the sake of it.

Let’s be realistic: what would have been the alternative for TSMC? Leave Apple’s investment out of the table and waste time bringing their new process online without it? AMD or Qualcomm would not be in a much better position right now. Or TSMC, for that matter.

What is the end game you’re afraid of? Apple takes its business elsewhere? To whom? Wouldn’t this leave TSMC with paid-for facilities they could now use to produce chips for other customers at a discount?

ksec · 10 days ago

> more likely we don't know enough to realize that there's sufficient weights on the other side of the balance to counteract the downside of enabling the monopoly on verticals.

Because your angle completely miss capacity and resources planning. As the 30 years old joke goes, most expensive Fab in the world isn't the leading edge Fab, it is the Empty Fab. And then there is the initial capital and order guarantee. As a matter of fact, it is nearly the same across all industry supply chain. Insert Pizza Doll, Sausage Rolls, Paper Towels, or the recent pandemic event Toilet Paper, and your skill set from production line are all the same.

It is not Apple is without risk, so to speak. They will have to fill the Fab orders, even if somehow no one buys any iPhone. It just happens Apple has never had this problem. Compared to Qualcomm, AMD, Nvidia which all have their fair share of flops and market did not react as they expected. Or you could end up like Nvidia where they had three quarter worth of GPU stocks sitting channel during the BitCoin crash.

Getting Apple ( or the largest customer )'s order filled with a price premium is and will always be the simplest and effective way for the business.

And there is a huge market in GPU, HPC, AI, and Cloud Computing along with forever increasing chips in all segment. TSMC isn't really beholden to Apple like Dialog or PowerVR IMG.

hedgehog · 9 days ago

You're missing that the customers aren't all buying the same thing. Apple is willing to make the investment/commitment and take the pain of shipping a product on a brand new node, and the tooling will last longer than Apple needs it for. That rolls from phones up (eventually) to big pro chips as yields etc improve, but then volume tapers off after a few years as most products move to newer chips on the next process. Apple needs a lot of capacity up front (iPhone launch) so they make the deals so TSMC can scale up. Later smaller players like AMD, NVIDIA, Intel, etc can use the proven nodes with less risk. 16nm/12nm is still perfectly good for lots of things. TSMC keeps the fabs busy for a long time, Apple gets the volume of parts they need at a good price. Apple doesn't directly compete with the other major semis so it doesn't really matter that they always have access to better manufacturing. It's all fine.

DeathArrow · 10 days ago

Having Apple as it's unique or main customer was a disaster for Imagination Technologies.

rkangel · 10 days ago

I wrote that very badly. What I wrote came out to be about a diverse customer base which is obviously a good thing. What I meant to talk about was "predictable demand". Being able to know your exact order profile for a lead time of years is very valuable in manufacturing.

That said, Apple probably just invested money in their 3nm in exchange for priority (or similar) and maybe TSMC is being a bit short sighted.

oblio · 10 days ago

Monopoly buyers are called monopsonies, FYI.

ascar · 10 days ago

> the risk is presumably that apple gains massive increases in marketshare of PCs/laptops and smartphones

Apple is very far from monopolistic market share of smartphones and even much further away with Laptops. Apple with their intentionally overpriced products caters to a branded premium segment. They are not even aiming to take the mass market of low to mid level smartphones that makes up most of the market outside the US

I would also not be afraid if I were TSMC, especially as this is just about the new 3nm process that is catering to the highend market and doesn't eliminate the existing business.

Your comment reads a bit like there could be a distopian world where a shortage of 3nm results in Apple becomeing the only option for phones and laptops

jagger27 · 10 days ago

This is complete FUD.

bryanlarsen · 10 days ago

This is HN, the audience should know that VC's have a very strong preference for a large number of small customers over a small number of large customers, and why.

Obviously TSMC doesn't care about VC's, but the same reason why VC's prefer a large number of small customers still applies.

InGoodFaith · 10 days ago

> VC's have a very strong preference for a large number of small customers over a small number of large customers, and why.

This is intriguing and I would appreciate if possible to get any sources to read up on this?

q-big · 10 days ago

> If you're TSMC, who are you going to favour - the large single customer who's guaranteeing order size over a period of time, or several smaller customers?

This depends on your business strategy: having a single or few customers makes you much more dependent on their whims and their negotiation power. If you have more customers you are in a better position for pricing negotiations.

bigdubs · 10 days ago

Big point of strength for TSMC in negotiations is they're the only fab that can make 3nm chips in volume, which gives them a ton of leverage to push back against Apple.

melony · 10 days ago

When you have a monopoly on a single component, it doesn't matter.

hinkley · 10 days ago

Everyone has forgotten that when Apple moved to Intel, part of the deal was that Apple had the fastest laptop CPU for about 6 months.

To me this says as much about Intel as about Apple. When Intel has a new chip or a bin that has small yields, they can’t supply a large customer. But MacBook had maybe a third of the market share it has now, so that’s a relatively small niche you can supply while you boost your yields.

intricatedetail · 10 days ago

I wonder if they had the same competitive advantage if they were not allowed to use tax avoidance schemes. Smaller corporations cannot afford to build such structures so they have more difficulties to compete.

fundad · 10 days ago

Making motherboards high volume that are faster than your competitors is something small businesses could not afford to do. We’re talking about one process that makes the same chips but more valuable.

And AMD and Qualcomm want more access to it than they have so they complain to the press. This is the supply chain folks.

pfortuny · 10 days ago

“My app depended on google and I have been banned”…

hvgk · 10 days ago

I don’t think so. This is the failure of having a choke point in semiconductor manufacturing and centralisation of all manufacturing infrastructure. No business is going to turn down the largest pile of cash being thrown at them. AMD and Qualcomm could of course have invested heavily in reducing this risk but no, they didn’t.

naasking · 10 days ago

> This is the failure of having a choke point in semiconductor manufacturing and centralisation of all manufacturing infrastructure.

Arguably, bleeding edge silicon fabs are natural monopolies. Pushing transistor sizes down to atomic scales entails non-linear increases in costs to get decent yields. That's why there are very few fabs at the bleeding edge any more.

hinkley · 10 days ago

I’ve worked for a couple places where we as a vendor we’re not given the respect and/or margins that the customer’s road map demanded. It was lousy watching customers crow about us while we were going bankrupt. If a deal is too good to be true, it probably is.

I’m not claiming Apple respects TSMC more than Qualcomm does (but does Qualcomm respect anybody? They are practically the bad guys in any number of stories), but this is what respect would probably look like.

Speaking of Qualcomm, Apple is trying to compete with them on radio chips, so leaving TSMC probably works to that goal.

newsclues · 10 days ago

If AMD didn’t sell Global Foundry and had kept pace with investment for modern fans would be an interesting alternative reality…

volta83 · 10 days ago

Yeah, one in which AMD actually ended up bankrupt and Intel became the only vendor supplying x86 chips.

sudosysgen · 10 days ago

AMD just didn't have that kind of money.

fomine3 · 10 days ago

Or what if UAE funds don't give up investing.

tentacleuno · 10 days ago

> AMD and Qualcomm could of course have invested heavily in reducing this risk but no, they didn’t.

We're in the middle of a chip shortage, though.

cormacrelf · 10 days ago

If, having seen the risk turn into reality, they want to buy some of Apple's capacity, they are free to make an offer.

fundad · 10 days ago

Yeah everyone need capacity and only one player can get it first.

kuschku · 10 days ago

If Apple can open their war chest (which they created through years of monopolistic actions) and buy capacity, that’s not fair.

AMD didn’t run a monopolistic business with 90%+ profit margins for years, and couldn’t have done so.

zepto · 10 days ago

Apple’s profit margins have never been 90%+. I recommend you do some googling before posting false information.

Apple has never had a monopoly on anything.

They just use the same silicon for a lot of products and have good profit margins, so they can place large orders with TSMC.

nojito · 10 days ago

They also pre-bought all airfrieght that year so that they won't have any supply chain issues for the holiday season.

georgeburdell · 9 days ago

As an outsider, dealing with Apple as a vendor strikes me as dealing with the mafia: once they've set their sights on you, they'll make you an offer you can't refuse.

Should you accept, they'll give you a shot of capital in the arm and you'll grow faster than you ever could have to meet their schedules. Soon, your engineers are tied up in daily afternoon stand-ups to go over the latest data with Apple's engineers, and they're dictating your R&D schedule. Your company is effectively dependent upon Apple because investors expect revenue growth. Inevitably, however, they'll discard you when a cheaper competitor comes along, or they decide to take the work in-house.

Should you refuse, they'll poach away your employees, or enable your competitors to do the same.

I haven't thought of a scenario where a vendor can actually rebuff Apple and stay intact.

klelatti · 9 days ago

Has any of this happened to TSMC? Are they now the most valuable semiconductor manufacturer?

Which is not to excuse some of Apple’s less moral behaviour.

georgeburdell · 9 days ago

It's been covered in the media that TSMC loans its employees to Apple. You can also tell that Apple's fingerprints are on TSMC's leading edge node processes because products using it clock lower and consume lower power than comparable Intel processes. Also, to my knowledge, TSMC doesn't particularly stand out in semiconductor sub-fields where Apple doesn't play, such as III-V, embedded memory, and photonics. They are definitely at risk of getting disrupted in these areas.

klelatti · 9 days ago

Apple is the biggest TSMC customer. I would be astonished if Apple doesn’t influence TSMC’s R&D, product focus etc.

But to characterise Apple as somehow abusing their relationship with TSMC as a result of what you’ve said is not right. It’s just a normal commercial relationship between a customer and a large supplier.

Also bear in mind that TSMC has a large number of mobile SoC customers - maybe they think that’s their strength and focus on that rather than say photonics. Seems to be working!

zucker42 · 10 days ago

Is Samsung 3nm competitive with TSMC 3nm? The information I'm finding online says Samsung 3nm pretty close to TSMC 5nm in density (for example [1]).

[1] https://www.breakinglatest.news/business/samsung-3nm-technic...

ksec · 10 days ago

Yes, because Samsung decide to be the world first in GAA ( Gate All Around d) hence first generation of 3nm is essentially a TSMC 5nm in density but slightly better in performance or energy and power on paper. ( Blame Samsung ) Think of it as TSMC 4nm.

Their 2nd Generation 3nm which should be what AMD and Qualcomm are using should he little better than this but we dont have any data. ( yet )

hristov · 10 days ago

There is a bigger problem than Apple first that the article does not mention. It is Mediatek second (i.e., after apple). Mediatek used to be a strictly second tier mobile processor maker, with Qualcomm and Apple's internal team occupying the first tier. Now Mediatek has overtaken qualcomm in market share. The main reason is that TSMC is making more chips for Mediatek than Qualcomm.

One can explain TSMCs preferential treatment for Apple based on purely commercial terms. Apple is after all the biggest foundry services consumer and they usually demand the advanced nodes which tend to be more expensive.

But there is no such explanation for TSMCs preference for Mediatek over Qualcomm. Qualcomm is generally as large as Mediatek, in fact they used to be significantly larger before TSMC hobbled them.

Well the first explanation that leaps to mind is patriotism (mediatek is a taiwanese company like TSMC, Qualcomm is American). But if that plays a significant factor then perhaps the chipmakers of the world should not so eagerly trust TSMC to make their chips.

throwaway19937 · 9 days ago

> But there is no such explanation for TSMCs preference for Mediatek over Qualcomm. Qualcomm is generally as large as Mediatek, in fact they used to be significantly larger before TSMC hobbled them.

Qualcomm has a longstanding reputation as a bad actor; they're the Oracle of hardware. It's easy to believe that other companies would prefer to avoid doing business with them.

Jensson · 10 days ago

Doing business with people who live in the same area, speak the same language and have the same culture is a lot easier and less risky.

NonEUCitizen · 9 days ago

Much more likely is that MediaTek was willing to invest what's needed (i.e. agree to TSMC's asking price) to catch up to / overtake Qualcomm.

Qualcomm as incumbent could've taken too much time trying to negotiate a lower price (e.g. "if you don't lower your price, we'll go to Samsung!").

jonplackett · 10 days ago

It’s interesting that Apple’s decision to transition to their own chips was probably lead, at least partly, by the fact they knew the could lock down all this next gen production.

If everyone else had access to cutting edge TSMC I’m sure Apple’s chips would still be good but I don’t think we’d be quite as impressed.

pram · 10 days ago

It's "interesting" that I never read any posts about how unfair it was when AMD was using TSMC 7nm to beat Intel. Makes you think, it does.

sudosysgen · 10 days ago

Unlike AMD for 5nm, Intel was free to fab their chips on 7nm at any time and chose not to. It's not an analogous situation.

Dylan16807 · 9 days ago

Because Intel had full control of their own design and fabrication. And while they had problems advancing their fabs, they also could have bought some TSMC 7nm capacity if they wanted to. That's fair. On top of them earning a loss by sticking with stagnant designs for so long.

smoldesu · 10 days ago

Probably because TSMC 7nm =! Intel 10nm

rsynnott · 10 days ago

> It’s interesting that Apple’s decision to transition to their own chips was probably lead, at least partly, by the fact they knew the could lock down all this next gen production.

Eh? The vast majority of Apple chips that will be made on this process will go into phones, and Apple has been doing its own phone chips for about a decade. The M1 won't be quite a rounding error, but it won't be far off; they just don't sell that many Macs.

Zigurd · 10 days ago

It is an integrated strategy: volume + design + supply chain + market power. Apple's CPUs are designed for scaling and binning. The chip designs, along with products like iMac and Mini, can be adjusted to respond to manufacturability and yield. Apple draws a winning hand no matter how the deck is shuffled.

fundad · 10 days ago

Exactly Apple made themselves first because otherwise AMD and Qualcomm would have been hogging the capacity but it’s only unfair if Apple does it.

sudosysgen · 10 days ago

When did AMD and Qualcomm ever exclusively operate a cutting edge node? Apple would have had to deal with reduced supply, but so would every other player.

fundad · 5 days ago

Not that we know of, for hardware supply.

Microsoft can't supply ARM Windows to Qualcomm's competitors. Windows can't be ported to anyone else's ARM chips because of an exclusivity agreement with Microsoft.

sudosysgen · 10 days ago

If everyone had access to cutting edge processes, Apple silicon would be behind. They're not even cleanly ahead despite a generation leap in RAM and in processes in CPUs and they're still behind in GPU performance per watt compared to NVidia on 8nm. If Apple wants to lead in performance they can't allow NVidia and AMD to be on the same process. They would even risk Qualcomm chips catching up.

gruturo · 10 days ago

Extraordinary claims require extraordinary evidence.... but I guess we could settle for just ordinary evidence, if you could care to provide some. Because, in its absence, what you wrote doesn't ring at all true.

sudosysgen · 10 days ago

How is this the case? AMD mobile CPUs, core for core, are anywhere from 13% slower to 20% faster (between Geekbench and Cinebench r20 and everything in between), and the M1 Max has a generational process advantage and 2-3x faster RAM, despite a similar TDP. In multicore, the Apple processors plainly consume way more power (62W vs 35W sustained) than any of the latest generation AMD processors yet released. Clearly the gap is within to ~25% process advantage and that's without taking into account much faster RAM.

Same goes in phones. The A14 is around 10-20% faster in all metrics than an 888 and has around that much of a process advantage.

akmarinov · 10 days ago

Well that's a load of bull that you just wrote.

Qualcomm uses the exact same process that Apple uses for the 888 and TSMC produces it, yet it's inferior in every way to the A14

sudosysgen · 10 days ago

The 888 is produced on Samsung 5nm LPE, not TSMC : https://www.anandtech.com/show/16463/snapdragon-888-vs-exyno...

Despite an inferior process, the 888+ and 888 are only 10-20% behind the A14 in most metrics including energy efficiency, despite being on a process with 35% lower density.

floatboth · 10 days ago

> generation leap in RAM

You mean the exact same LPDDR4X that everyone else uses now? Maybe not in huge quantities but there are a lot of AMD Renoir and Intel Tiger Lake laptops with the same 16GB setup.

sudosysgen · 10 days ago

The M1 Max and M1 Pro uses LPDDR5, not LPDDR4X. LPDDR5 is around 6 times faster than LPDDR4X but the CPU can use a bit less than half of that.

If you compare the M1 that uses LPDDR4X it loses or ties in multicore and is barely faster in single core.

dsign · 10 days ago

Fierce competition in this space is a good thing, we sorely need faster matrix multiplication for everything from graphics processing to the grammar checker in [insert name of your word-processing software]. So yes, more transistors please.

throwaway4good · 10 days ago

Do we really? (Serious question - what are the end-user applications that cannot be done today because of the lack of faster matrix multiplication?)

pfortuny · 10 days ago

VR headsets, games running at 4K 120fps, etc…

Anything using massive linear algebra.

throwaway4good · 10 days ago

4K 120fps - is that "sorely needed"?

coolspot · 9 days ago

Lightweight AR glasses that can last whole day on a 1000mAh battery.

thrashh · 10 days ago

Imagine being able to have the top of the line graphics performance that you can get now but on a chip the size of your fingernail in the future and the kind of industries that would be created once that became possible.

melff · 10 days ago

I think the opposite is true. Modern Hardware is more than fast enough for pretty much all end-user applications(except maybe high-end gaming, but that's not sorely needed), we're just too wasteful with all the performance we've already got.

ZuLuuuuuu · 10 days ago

Can't talk much about AMD but Apple-first policy isn't the problem with Qualcomm CPUs. Anybody who follows Qualcomm news knows that they were 99% focused on 5G for the last few years. TSMC 7nm node is available to them for a long time, and yet, they couldn't even come up with an answer to Apple's 2 year old A13 which was also TSMC 7nm.

I know I know, they bought NUVIA (which is widely believed to become the savior of Qualcomm CPUs), but we won't see any results of that acquisition until 2023.

MrBuddyCasino · 10 days ago

Ironic, given that Nvidia is moving away from Samsung for the next gen GPUs. Rumour has it they are dissatisfied by production capacity and yields.

Can't imagine their N3 process will be much better, but its good they found customers to finance their latest node with I guess.

enragedcacti · 9 days ago

you can't necessarily conclude that Samsung's N3 will be worse because their N8 was worse. Bleeding edge manufacturing requires gambles every couple of nodes with what technology you decide to invest your R&D into. TSMC's mix of lucky and good with EUV patterning won them an advantage over samsung who kept rolling with DUV for 8nm. Intel similarly gambled and fumbled around the same time.

Lots of people were asking why TSMC wasn't charging a higher premium for their 7nm when it was the best process in the world, my theory is that they understand the above and need to maintain relationships for the possibility that Samsung (and Intel as they adapt their business model) can come back around with a little bit of luck and a lot of investment.

peteyPete · 10 days ago

There was a good report on CNBC the state of chip manufacturing, TSMC, etc.. There is investment in building two large fabs in the US to help solve some of the current issues and to help avoid being cut off in case of geopolitical instability in the region. Worth the watch.

Secretive Giant TSMC’s $100 Billion Plan To Fix The Chip Shortage https://www.youtube.com/watch?v=GU87SH5e0eI

oDot · 10 days ago

Does anyone know if Samsung's 3nm and TSMC's 3nm are the same? I recall different fabs measure differently.

jpgvm · 9 days ago

They have long since become disconnected from feature size. They are more just for progression/naming purposes now. I think these 2 are similar in performance with TSMC with a slight edge from memory.