TSMC will prioritize Apple 'iPhone 13,' car builder chip orders

TSMC

In a challenging chip manufacturing environment, Apple partner TSMC is reportedly de-prioritizing orders destined for PCs and servers orders, and is instead focusing on car manufacturers, and Apple's needs.

Following TSMC's previous estimates that the impact of the current global chip shortage would last a "a couple of years," it is now said to be concentrating on supplying the the car industry and Apple.

According to Digitimes Asia, unnamed sources at the chip maker say that the prioritization is for the third quarter of 2021. It's claimed that TSMC will first give supply priority to car firms and Apple, then secondly to manufacturers of PCs, servers, and networking devices.

Although Apple initially appeared to weather the shortage better than its rivals, because of its high-volume purchasing power, it has more recently begun to see problems.

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17 Comments

blastdoor

said about 2 years ago

Meanwhile, in another market segment, GloFo is building new fabs, which should help address the shortage.

Hopefully balance will be returned by 2023 or so

lkrupp

said about 2 years ago

Is Apple TSMC’s biggest customer? Most profitable for them? Why prioritize Apple over other PC manufacturers?

ppietra

said about 2 years ago

lkrupp said:

Is Apple TSMC’s biggest customer? Most profitable for them? Why prioritize Apple over other PC manufacturers?

Apple is the biggest costumer and probably is the only one who is willing to pay more for access to the latest technology from TSMC.

imat

said about 2 years ago

ppietra said:

lkrupp said:

Is Apple TSMC’s biggest customer? Most profitable for them? Why prioritize Apple over other PC manufacturers?

Apple is the biggest costumer and probably is the only one who is willing to pay more for access to the latest technology from TSMC.

Probably also helped TSMC with the equipment investment (as Apple does sometimes).

Marvin

said about 2 years ago

lkrupp said:

Is Apple TSMC’s biggest customer? Most profitable for them? Why prioritize Apple over other PC manufacturers?

Seems to be the case:

https://www.taipeitimes.com/News/biz/archives/2021/03/09/2003753477

"Taiwan Semiconductor Manufacturing Co’s largest customer accounted for 25 percent of its total revenue last year. Analysts believe the unnamed company to be Apple Inc.
TSMC said that revenue generated from its largest customer rose 36.22 percent from a year earlier, meaning its sales to the customer rose from 23 percent to 25 percent of its total sales.
TSMC said it last year generated consolidated sales of NT$167.39 billion from its second-largest customer, up 9.49 percent from a year earlier.
While TSMC again did not identify the customer, which accounted for 12 percent of total sales, down from 14 percent in 2019, analysts said that the company is likely Huawei Technologies Co."

That data gives some insight into Apple's chip costs. Assuming Apple is responsible for the $11.9b revenue in that article, this would be for around 250 million chips (iPhone + iPad), which is roughly $50 per chip. This is a big reason for Apple to switch from Intel and AMD.

Previously Apple would be paying AMD to make chips with TSMC on an older node and then pay them some profit and they'd pay Intel to make chips on a much older node and pay even more profit. Now they can build the most advanced chips on the most advanced node at minimal cost and increase margins. Even for chips like the highest-end Macs, the costs will be miniscule compared to the $7k+ Intel was asking for and $2k+ AMD gets per GPU. 3nm chips in 2022 will have a density of 300 million transistors per mm^2, over 2x what the M1 has.