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by LAMike 1926 days ago
Anyone want to take a guess at how long it will be until Apple has their own fab in the US making M1 chips?
9 comments

Not in the next 10 years. Why would they? Fabs are extremely capital-intensive and take years to get up and running, when (like Taiwan Semi) knows how to do it. Intel has shown how hard it can be to do this right. Let TSM work on production (and hopefully get more/larger fabs in the USA up and running) and getting better at packing in the transistors, and let Apple improve the design (and software).
> Why would they?

Because Apple has a lot of capital and they wouldn’t need to compete as hard for their share of tsmc production capacity.

I wouldn't considered Apple to be even competing.

They are by far the biggest customer and have a multi-faceted relationship e.g. OLEDs, Modems.

they are addicted to cheap labor.
How much labor is involved in semiconductor manufacturing? It's mostly automated, right?
To a man carrying an axe, everything is a tree.
Labour isn't particularly cheap in Taiwan
They’ve vertically integrated everything else, and they’ve had great success along the way. TSMC has other customers that compete with Apple for production capacity. And there’s geopolitical risk in the region where TSMC (currently) operates.
> They’ve vertically integrated everything else

What do you mean by this? Apple does very little manufacturing, they're famous for it.

They’ve vertically integrated basically everything except manufacturing. Even compared to other tech giants who are highly integrated, they do a ton.
>They’ve vertically integrated everything else

Only in that they design it, not in that they build it.

In that area they have "vertically integrated" nothing.

Apple hasn't been vertically integrated in any kind of manufacturing since the 90s. It's all built in China.
> They’ve vertically integrated everything else, and they’ve had great success along the way.

Why would they want to get into the low-margin, high-risk part of their supply chain, the bit where you can sink billions of dollars and have the value wiped out by a poor choice?

Especially when semiconductor manufacturing has become a major geopolitical flashpoint between China, EU, US etc.

Apple would be insane to get into the middle of it.

Why would they make their own M and A processors? They could continue to buy Intel chips and revert back to using PortalPlayer and Samsung chips. Chip designing is capital intensive and takes years to get up and running, when Intel and Samsung know how to do it.
They did buy PA Semi to get off the ground. TSMC is probably way too expensive though.
They also bought Passif Semiconductor, parts of Dialog Semiconductor, Intel's modem team, Xnor etc.
Designing chips isn’t capital intensive, making them is.
Apple designs their own CPUs, GPUs, SOCs, Modems etc.

And they dominate the competition in performance/power.

Because of the non-zero chance of Southeast Asian fabs becoming suddenly unavailable.
This. It's not a money-making play; it's a catastrophic insurance policy.
But Apple has a lot of capital, and could win massive political brownie points for doing so, especially if they promised that some percentage of fab capacity would be sold to other American firms.
TSMC is based in on the soil of one of America's allies.
An ally who China is dreaming of re-assimilating (or taken over, depending on which side of the view you are) since its inception.

China is engaging in ever more aggressive saber rattling and the total lack of any measurable reaction to their takeover of Hong Kong only has emboldened them. Who can guarantee Taiwan won't end up the same fate?

I am very aware of the situation, being a resident of Hong Kong, and it's completely different. Hong Kong is indisputably a part of the People's Republic of China, and the Basic Law (our Constitution) is part of the constitution of the PRC. The government of Hong Kong has always emphasised that Hong Kong is part of One Country.

Taiwan is completely self-governed at the moment and sees itself as an independent nation.

Besides the 9 figure capital costs and the multi-year start-up, If you want a cutting-edge fab technology the pool of talent you have to recruit from is pretty small and most of them are outside of the United States.
By buying up the newest nodes, TSMC already gives them quasi-monopoly status. They would need to buy TSMC, but Taiwan may not want to sell it, as it's their most important company by far.
TSMC already announced a new fab in Arizona that will start delivering chips ~2024. Apple does not need to own a fab, they just need to diversify their chip supply chain.
Apple outsources all manufacturing. Why would that change?
Apple still runs an iMac factory in Ireland.
Without a major geopolitical change, like escalation of US-China tensions, sanctions on SE Asia or straight up war - likely never. Despite every incentive in place (tax breaks, consumer goodwill, better accessibility/control), what is the last domestic electronics manufacturing success story?
Seems likely Taiwan situation will escalate in the next 10 years. Apple may want to get started on the Fab now.
Manufacturing capacity will shift to South Korea, Japan, Malaysia, Singapore, India etc. before the US if that happens. The labor and expertise needed to set up such an operation is just not available here anymore.
My M1 Mac Mini says ‘Made in Malaysia’ on it
In the past, haven’t they made exclusive deals with manufacturers by helping them spin up new factories in exchange for exclusive access for X number of years?
IIRC, Apple basically made "retina displays" happen - when nobody else would make that expensive step - by telling a screen manufacturer "here is a very large check; build a factory to make these at commodity scale, within one year."
With Apple holding a lot of cash offshore awaiting for a favourable way to onshore it, combined with the political eagerness to bring chip production onshore. Those two aspect may well pan out to a situation in which the accountants see it as a win win.

Even then, do Apple use enough chips to justify running a fab, let alone one that would be locked into the node of the time. I really don't see it happening for many reasons and the only reason they would - would be some tax break incentive to onshore some of the money they have offshore in that it pays for itself, win or fail.

They would be better off paying the taxes. Making chips isn’t a tax dodge, it’s a hugely expensive many year commitment.
> With Apple holding a lot of cash offshore awaiting for a favourable way to onshore it

I don't think that's relevant anymore. My understanding is that the 2017 TCJA required prior unrepatriated earnings to be recognized and taxed over eight years (so still ongoing) and future foreign earnings not subject to US tax (except if the foreign tax is below the corporate alternative minimum tax rate). As a result of those changes, there's no need to hold cash offshore.

I can absolutely see both parties wrapping a flag around an investment tax credit for building a fab in the US. To the person saying taxes don't matter because it's expensive -> The more capital cost the better if they can use that to offset taxes.
Why would they want to do that?