[causal]

Yeah I'm a little confused by the premise. How would reshoring chip production be easier if Apple weren't out there buying chips? I get that they are buying up all of the TSMC chips in some segments. Doesn't that just create demand for an alternative? I can't cohere the themes of this article.

[windexh8er]

It's not just TSMC chips. Apple forces other chip manufacturers into exclusive deals to lock out the ability for 3rd party repair to be done cost effectively and reliably. Apple shouldn't be able to control the chip markets as they do. As indicated in the article they create slave labor conditions in a lot of these manufacturers because they're wholly dependent on Apple's whims. This also creates an e-waste problem globally as Apple inhibits the ability to more easily repair their hardware. Louis Rossman has some great examples [0] of Apple continuing to put defective hardware into devices that Apple knows will, and has, failed and there is no easy way to replace these components because Apple has locked up the supply chain via purchasing all available inventory and having exclusive rights to non-proprietary chips. This means you can't repair a device you own at a fiscally fair price. Instead you're forced into buying an entire assembly so Apple can charge a much higher multiple on a part that has higher margins which may just force you to buy an entirely new product because of the price point differential.

[0] https://youtube.com/watch?v=Z0DF-MOkotA&feature=shared

[JumpCrisscross]

> Apple forces other chip manufacturers into exclusive deals to lock out the ability for 3rd party repair to be done cost effectively and reliably

How is this relevant to the chips TSMC manufactures? You can't exactly hand solder a 24nm feature.

[Kirby64]

There’s no “forcing” chip manufacturers into exclusivity deals. Chip vendors want the business, and Apple wants stuff customized for them. Plenty of IP that can be used in general market parts, too. Also, I can guarantee you that there’s a good amount of vendors that would rather not be forced to offer their chips that they provide to Apple on the general market.

[windexh8er]

> There’s no “forcing” chip manufacturers into exclusivity deals.

I'm not sure there's a fundamental understanding of how large businesses are changing their approach to supply chain in the name of competition with this statement.

The choice of these manufacturers is either take the volume order from Apple at lower margins and with stipulations or deal with market volatility. It's the stipulations aspect of what Apple is doing that is anti-competitive and generally horrible for consumers. Do you happen to work for Apple? Seems to be a very Apple-apologetic post for no good reason.

> Also, I can guarantee you that there’s a good amount of vendors that would rather not be forced to offer their chips that they provide to Apple on the general market.

OK. I'll take you up on that guarantee. Feel free to reply with reputable sources on the matter.

[Kirby64]

> The choice of these manufacturers is either take the volume order from Apple at lower margins and with stipulations or deal with market volatility. It's the stipulations aspect of what Apple is doing that is anti-competitive and generally horrible for consumers. Do you happen to work for Apple? Seems to be a very Apple-apologetic post for no good reason.

I don't, I just work in the industry. These aren't an either-or decision on Apple or not Apple products. IP from developments on Apple-exclusive stuff is used elsewhere. Look at TI's USB-C port controllers as an example used in Macbooks. They have a custom one for Apple, but you can buy their general market parts online just fine. It's not like Apple is preventing TI from selling USB-C controllers.

> OK. I'll take you up on that guarantee. Feel free to reply with reputable sources on the matter.

You won't find 'published sources' on this. You'd need to have a fundamental understanding of semiconductor industry. Support for general market customers is HARD. They tend to be particularly needy, especially compared to the return on investment. If your organization is designed around helping large customers (not just Apple, but any large customer) then you just do not have the appropriate business structure in terms of sales, distribution, etc, to manage that. Companies like TI/NXP/ST have that infrastructure, but there's plenty of smaller companies that just do not really support small customers.

I get that repair shops 'just want to buy the chip', but that's really not what making parts available on the market means. It means fielding questions, publishing datasheets, having FAE/sales support, having distribution channels, etc, which all adds to cost for very little ROI. Repair shops are basically a rounding error in terms of buying power compared to a Samsung, Apple, etc.

[windexh8er]

> I get that repair shops 'just want to buy the chip', but that's really not what making parts available on the market means.

This is where your argument breaks down at the fundamental level because this is flat out incorrect. Organizations like Digikey, and many others, do exactly this. They've been around a long time and they cater to low volume buyers at reasonable margins.

Unfortunately your argument seems rooted in missing fundamentals and conveniently are ignoring entire market segments to bolster your argument that Apple isn't in the wrong here. They are. And what they're doing is anti-competitive.

[Kirby64]

Did you overlook the rest of my comment? Digikey et al can handle distribution, yes, and in some cases can offer minor applications assistance, but they are not the manufacturer and therefore do not have the domain expertise required to adequately support the product. Especially complicated products. I can tell you I've worked with distribution FAEs directly, and they're more-often-than-not just messengers used to shuttle information from the customer to the actual manufacturer FAE or direct applications engineer.

They also don't produce any documentation, nor produce any application boards, collateral, drivers, etc.

Market segments that a company (a semiconductor company) wants to service all have different needs. General market/distribution is a very different business from custom/large customer business. Just like it's very different from industrial. Or automotive.

[rbanffy]

> Apple inhibits the ability to more easily repair their hardware.

This is why we need right-to-repair legislation with teeth.

[necovek]

The point there seems to be that Apple is pretending to invest and align with moving production to US, but it's really gobbling up the entire foreign production and not at all interested in the "patriotic" narrative, even if they are marketing themselves as such.

Basically, it's mostly: Apple is lying with their marketing, here's what proves they really don't care about moving production to US, but only about price and their profit margins.

[rbanffy]

Tim Cook has an obligation towards the shareholders and takes it seriously. As an Apple shareholder who doesn’t live in the US, moving to US chip suppliers would not help with his obligations towards me.

I do like the US - don’t get me wrong - but Apple is in the business of making devices, not making investments the government should be at least facilitating.

[e44858]

That's why we need tariffs, to make Apple suffer financially if they refuse to move production back to the US.

[rbanffy]

As a shareholder, I wouldn't be impressed. As a supporter of a more just and equal planet, I'd be in.

Be mindful that such tariffs wouldn't hit Apple alone.

[necovek]

"For a company with a market valuation of over 2T dollars at the time of import, import tariffs ..." :)

[causal]

That much seems easy to believe, I just find it hard to connect that to an obstacle for domestic chip production

[Barrin92]

>How would reshoring chip production be easier if Apple weren't out there buying chips?

Because Apple's dominant position as a monopsonist means it has price setting power and depresses the profits in the chip industry, making all but the cheapest locations effectively unsustainable. Monopsonists essentially absorb the profits of their suppliers. This is for example why nationalized health services are cheap.

[kergonath]

This does not sound like a complete picture. Apple might depress the prices for themselves, but not for other fab customers. On the contrary, if there is a supply issue, with one customer getting all the production, then prices should go up overall, helping competing fabs. In a situation with a huge production shortfall, it becomes a matter of initial capital, with which governments can help effectively (either with subsidies or with tax incentives). If the customers are there and demand is strong, eventual RoI should be ok.

In your example, not only has the government huge bargaining power, but the law itself limits other customers, and this there is no demand outside of the government. In contrast, there are plenty of customers for semiconductors. Demand is still here.

So yes, Apple might reduce TSMC’s margin, but the real problem is not that. It’s that there is nobody else operating on the same scale. The fact that there is no alternative for cutting edge nodes is a sign of a market failure.

Besides, this “it’s Apple fault and they depress margins” sounds disingenuous. Apple famously invested quite a lot in TSMC’s fabs in exchange for this access to the latest nodes. And TSMC also benefits from stable, predictable demand. The real problem is the spectacular failure of Intel and the complete lack of effectiveness of the handful of governments that could do something. Things seem to be changing, even if it is slow, but we should never have been in that situation in the first place.

[Barrin92]

>but not for other fab customers

there aren't that many, that's the point. Apple is responsible for most of its suppliers revenue as the article points out, otherwise it wouldn't have price setting power to begin with.

We aren't in a supply shortage, with the exception of a bunch of AI related chips (the only thing the media talks about, hence the skewed perception) we've bin in a supply glut. Semiconductor revenue declined by 11% last year. AI chips aren't the only chips in the world, DRAM makers like Micron, an American manufacturer are the kinds of companies that are effectively at the mercy of Apple because of how outsized of a portion of the market they are.

[kergonath]

> there aren't that many, that's the point.

There’s at least Qualcomm, AMD, and nVidia. All of these are huge. And then there are the smaller niche actors (who tend not to use the cutting edge, but help with RoI by forming the long tail). Demand is clearly there.

> Apple is responsible for most of its suppliers revenue as the article points out, otherwise it wouldn't have price setting power to begin with.

Apple has price setting power because they helped funding the fabs and the process. I agree that the result is not great for the industry overall, but they did not show up one day and kick the other customers out. Again, the main issue is the limited bandwidth because everyone depends on effectively a single supplier.

> we've bin in a supply glut.

Not on the leading nodes, though, right? The ones over which AMD, Apple, and nVidia are fighting. Or I missed that, in which case I would love to have more information (I mean solid, with numbers). That said, if that’s the case it does not help the story’s argument. Oversupply leads to lower margins, but one customer taking a large chunk of production restricts supply, which has the opposite effect.

> AI chips aren't the only chips in the world, DRAM makers like Micron, an American manufacturer are the kinds of companies that are effectively at the mercy of Apple because of how outsized of a portion of the market they are.

DRAM and CPUs tend not to use the same processes, so the only way they are in direct competition is because investment is limited but that point is undermined by Apple financing the fabs. So what is the actual problem here? IIRC Micron is investing quite a lot in new fabs in the US, with the help of the government, which is exactly what needs to happen.

The more I think about it, the less convincing the whole thing is. The story is a collection of rants because the author does not like Apple, but it is full of contradictions and non sequitur. There are some good points beneath, but they are well hidden and not directly relevant.