Calling Nvidia niche feels a bit wild given their status-quo right now, but from a foundry perspective, it seems true. Apple is the anchor tenant that keeps the lights on across 12 different mature and leading-edge fabs.
Nvidia is the high-frequency trader hammering the newest node until the arb closes. Stability usually trades at a discount during a boom, but Wei knows the smartphone replacement cycle is the only predictable cash flow. Apple is smart. If the AI capex cycle flattens in late '27 as models hit diminishing returns, does Apple regain pricing power simply by being the only customer that can guarantee wafer commits five years out?
I dislike this dramatization in reporting of mundane facts.
So report the facts but sentences like "What Wei probably didn’t tell Cook is that Apple may no longer be his largest client" make it personal, they make you take sides, feel sorry for somebody, feel schadenfreude... (as you can observe in the comments)
I hate this writing as well. Is not about technology and finance? The reporter writes as if it is a novel.
It used to be „don’t use Wikipedia as an academic source“ now it’s the same wit ChatGPT
That's great! Apple has the resources to incentivize and invest in alternate production capacity(Intel, Samsung, or others). Sure, it will take years, but a thousand mile journey begins with one step...
Apple is actually a big reason why TSMC is the king of fabs today. They were a reliable cash source for years before TSMC was even ahead of Intel.
Apple can and should do it again!
Explains why Apple is looking to diversify their fabs with Intel. If Intel can stay on their current trajectory and become a legitimate alternative they will do very well as a fan with additional available capacity.
Maybe I missed something but aren't Intel looking to wind down some of their production ?
The key here is Intel is expanding the idea of operating their fab for an external customer (foundry services). What they’re doing with specific fabs or processes is less important relative to their bigger emphasis on working for a client like Apple.
How the turn tables
Well, someone is tasting a bit of their own medicine.
pft Emotional intelligence damage ,, instant karma pov: apple be like
Ha! Well if it isn't karma that has come for Apple.
(Apple is well known for shoving "lesser vendors" out of the way at TSMC)
Is it karma or is it just normal business activities? When you're a large player like this you get pricing power. If another large player moves in and also has pricing power then negotiations and things like that take place. Business deals, profits, &c. all ebb and flow and this is no different.
Karma’s a bit.
Tim Cook failing on the Cook doctrine ("We believe that we need to own and control the primary technologies behind the products that we make") is ironic.
Owning a leading edge fab is not practical for most companies, even huge some ones like Apple.
Intel has even struggled with it since they traditionally didn’t sell capacity to other buyers. It worked for Intel because they traditionally had a near-monopoly over the laptop, desktop, and server chip market.
Apple certainly has the money to spin up their own chip fabricator, but there’s no guarantee it would be as good as TSMC, it would cost billions, and they would have less of an ability to sell capacity to other customers.
At the end of that effort they could be left with a chip fab that produces chips that still cost the same or more than what TSMC manufactures them for.
...and then China invades Taiwan, and nobody ain't getting nothing.
I feel like China invading Taiwan isn't happening in our lifetimes. Yes, they stand to benefit from it, but I doubt any of the people in charge of decision making are that interested in rocking the boat. There's nobody forcing their hand and the country is doing great without needing to invade anyone.
Let's hope China doesn't get a leader like Donald Trump in our lifetimes, then I think your prediction will apply. Despite the political tensions, China and Taiwan are so deeply integrated economically that an invasion would hurt not only Taiwan and the global economy, but also China (directly and indirectly). The EU and the US are making efforts to re-shore some semiconductor manufacturing, but TSMC and others will probably still keep a sizable amount of manufacturing in Taiwan, so I don't think this interconnectedness will change anytime soon...
That depends on a certain administration, and it isn't looking good, "if they can, we also can".
They are 100% going to force the issue.
It will likely be a naval plus air blockade to force a political solution to avoid the messiness of an invasion, but time is on China's side there.
Is time on their side?
Long term: demographics are worsening for China relative to now or 5 years ago.
Short term: China doesn’t yet have viable homegrown replacements for ASML, TSMC, etc.
Really short term: China blockading Taiwan and suffering the economic fallout would be much more painful than US blockading Cuba/Venezuela/etc.
A decisive kinetic action or a very soft political action, rather than a blockade seems more viable in the current state.
The US has its own TSMC supply (insert comments about it not being cutting edge). And the US will stand-down and let China take Taiwan with no serious conflict in exchange for supply agreements. Not more than 5-10 years out at this point.
The US can't even remotely come close to stopping China in its own backyard today, in another 5-10 years they'll just have that much larger of a Navy. The US knows that's the situation. The US can supply a large one week bombing campaign against China and that's it, based on inventory levels. The US will exhaust its cruise missile supply instantly and the US has almost no meaningful drone-bomb supply. China can build cheap missiles by the tens of thousands perpetually, train them to the coast, and flatten Taiwan and any opponents as necessary. China is the only country that can sustain a multi-year WW2 style bombing campaign today, thanks to its manufacturing capabilities. Imagine them on a full war footing.
> The US has its own TSMC supply (insert comments about it not being cutting edge)
USA has been strategically re-homing TSMC to the US mainland for a long time now. 30% of all 2nm and better technologies are slated to be produced in Arizona by 2030.
The real loser in all of this will be the EU which will be completely without the ability to produce or acquire chips. They'll just end up buying from China and USA, which will only further deepen their dependence on those countries.
applesisters...
You could at least link to a Satania pic
Hey Apple, how does it feel?
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Tell us how you really feel.
I tend to agree with you, feels to me like the root of this is essentially whether foundries will "go all in" on AI like the rest of the S&P 500. But why trade away one trillion-dollar customer for another trillion-dollar customer if the first one is never going away, and the second one might?
I think it is less of a trade and more of a symbiotic capital cycle, if I can call it that?
Nvidia's willingness to pay exorbitant prices for early 2nm wafers subsidizes the R&D and the brutal yield-learning curve for the entire node. But you can't run a sustainable gigafab solely on GPUs...the defect density math is too punishing. You need a high-volume, smaller-die customer (Apple) to come in 18 months later, soak up the remaining 90% of capacity and amortize that depreciation schedule over a decade.
Isn’t the smaller die aspect more valuable early in the node’s maturity, where defects are less punishing?