[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.