Maybe they blinked. But maybe they'll have the last laugh.
Here's how the negotiation went (a fly on the wall told me):
- TSMC: can you pretty please start paying us 6% more for the next batch of half a billion chips?
- Apple: we can buy we'd rather not
- TSMC: why not? you know you can't find anyone else to supply you half a billion chips in XX months
- Apple: that's right. But we can find someone to sell us the next half a billion chips, in 3 times XX months
- TSMC: we'll take that chance
- Apple: let's chat later
Now it's that later. Apple will pay the 6%, but they'll start looking around. TSMC will pocket the money, but now they have a mighty pissed off customer.
Apple has always had that option, and will always have the option to leave regardless of TSMC asks for. Apple frequently drops suppliers & partners whenever they feel like it is needed (IBM, Intel, Imagination, Samsung Foundry), so if I were a supplier I would prioritize money now versus Apple's feelings.
I’m not sure how Apple being pissed matters here (for one thing, I’m not sure why Apple is pissed in the first place).
If Apple got a better deal than TSMC somewhere else they would have taken it. Irrespective of whether they were pissed or not.
And Apple has probably been constantly looking for TSMC alternatives anyways. That’s something they do anyways, but even if that wasn’t the case, they would have been specifically looking for TSMC alternatives to reduce their geopolitical risk.
Apple was reported to have let go of a senior executive in charge of procurement in followup to his quote from an 80s movie expressed on tiktok; that, could've undone the ealier refusal.
7 comments
[ 4.0 ms ] story [ 33.0 ms ] threadLooks like Apple blinked.
Here's how the negotiation went (a fly on the wall told me):
- TSMC: can you pretty please start paying us 6% more for the next batch of half a billion chips?
- Apple: we can buy we'd rather not
- TSMC: why not? you know you can't find anyone else to supply you half a billion chips in XX months
- Apple: that's right. But we can find someone to sell us the next half a billion chips, in 3 times XX months
- TSMC: we'll take that chance
- Apple: let's chat later
Now it's that later. Apple will pay the 6%, but they'll start looking around. TSMC will pocket the money, but now they have a mighty pissed off customer.
If Apple got a better deal than TSMC somewhere else they would have taken it. Irrespective of whether they were pissed or not.
And Apple has probably been constantly looking for TSMC alternatives anyways. That’s something they do anyways, but even if that wasn’t the case, they would have been specifically looking for TSMC alternatives to reduce their geopolitical risk.