Hacker News Reader

Comment by NineStarPoint | Hacker News Reader

I suppose it's an Apple news site, but calling them "Apple chipmaker" is a heavy understatement of how ubiquitous TSMC's chips are. Even without Apple involved TSMC would have its foundries running at full capacity to meet demand. Ignoring geopolitical concerns, TSMC is much more of a "boring" manufacturing company than a tech company. So it's not surprising that Berkshire would invest in it.

View on HN

To be fair...

Apple's their largest customer by about a factor of 5, makes up about a quarter of TSMC's revenue, and probably bought more than half of TSMC's 5nm wafer production last year.

Definitely Apple makes up a massive part of TSMC’s profit, and whoever replaced them would likely not be willing to pay as much for the privilege. The crazy thing though is that TSMC has a net profit margin of about 41% (and this isn’t a fluke, it hasn’t been below 30% in the last 10 years). Even if they lost Apple and left the foundries empty during their slots, they would still be profitable.

Is there somewhere were I can see the breakdown of their largest customers? I would be curious to see the TSMC customers that trail Apple and by how much.

I would imagine nvidia and AMD are pretty high up there as well.

Digitimes estimates put mediatek in second place.

https://www.digitimes.com.tw/tech/dt/n/shwnws.asp?cnlid=1&id...

I’m not a native speaker, but for me it sounds valid to call the company that produces the majority of Apple chips: Apple’s chipmaker.

It doesn’t exclude that they produce for other companies, but it concludes that Apple gets most of it’s chips from them. Right?

I think the objection is about a functionalist perspective. Is it more accurate to call TSMC a chip manufacturer, or an Apple chip manufacturer?

If I happen to be the person who buy's the most Starbucks at my local cafe, does that make it my cafe? Is the core function of the cafe to make coffee or to make coffee for me?

Is the core function of TSMC to serve Apple's needs or to make chips? Do you see the difference?

If you were a famous person who only bought their coffee at that one place, and bought more coffee than (nearly) everyone else put together -- then yeah, I would definitely call that place "cjt's coffee place"

But the ambiguity is still there. If Gordon Ramsey loves a certain sushi restaurant and is the only one he eats at, calling it Gordon's sushi restaurant would be very confusing since it could realistically be either (or both) of the interpretations.

The same can be said for Apple, which prides itself for how vertically integrated they are

Continuing the restaurant metaphor, there is a big difference between Apple's and TSMC's relationship and a celebrity and a restaurant. The celebrity might tweak the menu a bit but it is the chef (and their cooks) which decides on how to cook it. Meanwhile, the Apple-TSMC relation is more integrated: in food analogy Apple also gets to decide what equipment they use, where to source their ingredients and shares some of their secret recipes.

Apple may be their biggest customer but at the end of the day they are still a customer. If TSMC wanted to, or had to, drop Apple as a customer they can. And they can only do this since TSMC isn't Apple's.

Does it have to be the person who buys the most?

“My company is having layoffs”. People would know that I don’t own my company.

Those aren't the same parts of speech though. The subject-object relationship is different.

If you're talking from the perspective of who make Apple's chips, yeah. This is an article about an investment Berkshire made though, and spent most of its time talking about his investment history with Apple and sort of...is structured in a way that says they view this investment as a doubling down on their Apple investment and not a investment that stands apart on its own terms. My issue with the phrase is less its use in a vacuum, and more the article as a whole in a way that is boiled down to how they only describe TSMC as Apple's chipmaker.

Yes, and on an Apple news site that makes sense.

However, in a more general (not Apple-focused) context it might be more appropriate to start with what the company does (chip foundry/fab) and if needed then note their most important customers (Apple, AMD, NVidia).

Most people don't know TSMC or what they do or how chips get made or any of it. It's just to put it in context for a good chunk of the readers.

Put another way - you aren't the audience they have in mind when writing that headline.

Hard to imagine a bigger "moat" than SOTA chip fabs. Surprised it took Buffett this long to move into the space.

It’s only a moat up until you fall behind. Intel had that moat once too

It literally confused me when I read Apple chipmaker. I thought for a moment, did Apple buy TSMC?

People also routinely call Foxconn ”the iPhone factory”, especially if something bad happens there

jesus christ calling TSMC an "Apple chipmaker", tactless.

I would call Berkshire an “Apple stockholder” since the only reason they have kept up with the market over the last 10+ years is because of their Apple holdings.

Why didn’t the other investments pan out?

Buffett missed out on massive tech company returns because he was opposed to investing in businesses he did not understand, and he did not understand tech companies.

https://www.theguardian.com/technology/2016/may/16/warren-bu...

>Asked why he had bought IBM shares rather than Apple or Google at Berkshire Hathaway’s 2012 shareholder meeting, Buffett said: “The chances of being way wrong in IBM are probably less, at least for us, than the chances of being way wrong in Google or Apple ... I just don’t know how to value them.

>“I would not be at all surprised to see them be worth a lot more money 10 years from now but I would not buy either one of them. I sure as hell wouldn’t short them either.”

And then Buffett made some bad bets on Kraft Heinz (3G was a poor partner to invest with, actually was a surprising move since 3G already had a poor reputation) and IBM, but I think it was mostly missing out on Facebook/Google/Microsoft/Apple/Amazon/Netflix/etc growth.

https://www.reuters.com/article/us-berkshire-buffett-kraft-h...

How did he not buy Apple and end up with Apple being 40% of Berkshire?

He did relent and buy Apple in 2016. The quoted portion is from the 2012 shareholder meeting.

Also, by what measure is AAPL 40% of BRK?

I went off of this: https://www.cnbc.com/berkshire-hathaway-portfolio/ but it may be outdated.

Either way it's 5% of APPL, which means Apple is HUGE.

I assume that is only a list of the publicly listed shares BRK owns, since it totals to $345B and the market cap of BRK is ~$680B. They must have other assets for such a huge pricing discrepancy.

Yes. The stock portfolio is only a fraction of BRK. They own an entire railroad (BNSF), a very large electricity utility, GEICO and other insurance firms, and dozens of other entities - many would be Fortune 500 firms on their own.

> Buffett missed out on massive tech company returns because he was opposed to investing in businesses he did not understand, and he did not understand tech companies.

He also missed out on massive tech company losses.

BRK has clobbered the index on a 1 and 2 year basis, and beaten it on a 5 year basis. I'll wager a good sum that as interest rates continue to be nonzero, they will continue to massively outperform.

There is no shame in a market performance when zero interest rates have caused people to chase crypto, GME, and other money-losing businesses. People are in the process of finding out how, say, AMC or TSLA will do when there is a actual cost of money.

(edit: spelling)

Reply on news.ycombinator.com