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Apple is fighting for TSMC capacity as Nvidia takes center stage (culpium.com)

773 points by speckx · 188 days ago · 478 comments on HN

Article summary

The article discusses Apple's struggle to secure TSMC capacity due to Nvidia's increased demand. Apple is a major customer for TSMC, but Nvidia's willingness to pay high prices for early access to new nodes is impacting Apple's ability to get the capacity it needs. The situation is seen as a normal business negotiation, with TSMC making decisions based on pricing power and demand. Apple's large-scale orders and creditworthiness make it an attractive customer, but Nvidia's high-margin products give it an advantage in bidding for capacity.

Main themes

  • TSMC capacity allocation
  • Apple vs Nvidia
  • Pricing power and demand
  • Semiconductor manufacturing
  • Business negotiations
  • Yield management and binning

What commenters say

  • Apple's large-scale orders and creditworthiness make it an attractive customer for TSMC, but Nvidia's high-margin products give it an advantage in bidding for capacity.
  • The situation is seen as a normal business negotiation, with TSMC making decisions based on pricing power and demand, rather than Apple being pushed out by Nvidia.
  • Nvidia's willingness to pay high prices for early access to new nodes is impacting Apple's ability to get the capacity it needs, but Apple has the financial resources to match or beat Nvidia's offers.
  • The concept of binning, or disabling defective parts of a chip to sell it at a lower price, is relevant to both Apple and Nvidia, but its extent and application are debated.
  • TSMC's decision-making process is driven by short-term and mid-term auction-like planning, where the highest bidder gets priority, but this system can be problematic if one player has a short-term ability to vastly outspend others.
  • Apple's profit margins are high enough to absorb potential price hikes or yield drops, and the company can stomach some short-term costs to maintain its market position.
  • The foundry industry's focus on short-term profits can lead to an uneven playing field, where smaller customers may be pushed out by larger ones with more financial resources.
  • The relationship between TSMC and its customers is complex, with factors like yield management, binning, and pricing power influencing the allocation of capacity and the production of chips.