Apple is TSMC's #1 customer and they account for 25% of their revenue | Hacker News Reader

Apple is TSMC's #1 customer and they account for 25% of their revenue

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22 pointsretskrad12 comments

I wonder what would happen if TSMC arbitrarily revoked Apple's order due to alleged "breach of terms and conditions" and witheld IP.

That would be corporate suicide. Ignoring the inevitable lawsuit (from Apple) that would result, the loss of 25% of your revenue is a sure fire way to destroy a company. Then there'd be lawsuits from your investors over that, and it becomes a whole mess.

Not to be cynical, but it's also why big YouTubers have their own support person they can email with issues, while the little ones don't. It's not necessarily because YouTube (as a company) cares about them, but because the loss of ad revenue from those million+ subscriber channels would be a bad idea. People there definitely care about those YouTubers, but ultimately, YouTube as a company is dependent on those channels existing. Without them, watch times are lower, which leads to less advertising revenue, which leads to less motivated YouTubers, and so on.

And yet AAPLs market valuation has taken off while TSMC has been flat at best.

They extract quite different margins from their products; the big markup (and thus profit, and thus the justification for market valuation) happens not when a chip is manufactured but when it's put in an iPhone.

The iPhone's processor manufactured by TSMC contributes only about $40 to the cost of the phone (https://www.phonearena.com/news/iphone-12-bill-of-materials-...).

The Macbook's M1 key advantage to Apple seems to be that it's cheaper than the previously used Intel processors (https://www.techspot.com/news/87663-apple-possibly-saving-bi...), so again, it's a major boost to the profitability (and value) of Apple, and just a minor one to TSMC who gets paid a reasonable but effectively commodity price for their manufacturing.

Completely good points. Thank you.

I wonder if TSMC can raise prices since Apple doesn't have a lot of other options at the 3nm level.

It is hard. But I hope they do. They need to paid their engineers better to compete. Their expansion to US are already costly. ( US engineers working in TSMC are already complaining about working conditions and salaries. I am not surprised. )

Apple doesn't always have to use 3nm, they could have stick with 4nm for another year and let other parties to pay the bill. But what if other parties are not interested at those cost. TSMC will be back to square one. So in reality it kinds of goes both ways.

I believe that the prices (and both the availability of capacity and the requirement to use it/pay for it) for Apple were locked in even before TSMC had the current 3nm process, as a certain source of revenue removing much of the business risk of building the fabs.

I am surprised to see MediaTek as the second largest customer.

Mediatek make up to 25% of Mobile Phone / Tablet SoC. ( May be 30% by now ) Along with TV, STB, WiFi etc.

I thought AMD is bigger than 5%.

duh~

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