Nvidia is the high-frequency trader hammering the newest node until the arb closes. Stability usually trades at a discount during a boom, but Wei knows the smartphone replacement cycle is the only predictable cash flow. Apple is smart. If the AI capex cycle flattens in late '27 as models hit diminishing returns, does Apple regain pricing power simply by being the only customer that can guarantee wafer commits five years out?
Nvidia's willingness to pay exorbitant prices for early 2nm wafers subsidizes the R&D and the brutal yield-learning curve for the entire node. But you can't run a sustainable gigafab solely on GPUs...the defect density math is too punishing. You need a high-volume, smaller-die customer (Apple) to come in 18 months later, soak up the remaining 90% of capacity and amortize that depreciation schedule over a decade.
Apple OTOH operates at consumer electronics price points. They need mature yields (>90%) to make the unit economics of an iPhone work. There's also the binning factor I am curious about. Nvidia can disable 10% of the cores on a defective GPU and sell it as a lower SKU. Does Apple have that same flexibility with a mobile SoC where the thermal or power envelope is so tightly coupled to the battery size?
For example the regular M4 can have 4 P-cores / 6 E-cores / 10 GPU cores, or 3/6/10 cores, or 4/4/8 cores, depending on the device.
They even do it on the smaller A-series chips - the A15 could be 2/4/5, 2/4/4, or 2/3/5.
For Apple, they have binning flexibility, with Pro/Max/Ultra, all the way down to iPads - and that’s after the node yields have been improved via the gazillion iPhone SoC dies.
NVIDIAs flexibility came from using some of those binned dies for GeForce cards, but the VRAM situation is clearly making that less important, as they’re cutting some of those SKUs for being too vram heavy relative to MSRP.
The Pro and Max chips are different dies, and the Ultra currently isn't even the same generation as the Max. And the iPads have never used any of those larger dies.
> NVIDIAs flexibility came from using some of those binned dies for GeForce cards
NVIDIA's datacenter chips don't even have display outputs, and have little to no fixed-function graphics hardware (raster and raytracing units), and entirely different memory PHYs (none of NVIDIA's consumer cards have ever used HBM).
Otherwise, yes, if a chip doesn't make M4 Max, it can make M4 Pro. If not, M4. If not, A18 Pro. If not that, A18.
And even all of the above mentioned marketing names come in different core configurations. M4 Max can be 14 CPU Cores / 32 GPU cores, and it can also be 16 CPU cores and 40 GPU cores.
So yeah, I'd agree that Apple has _extreme_ binning flexibility. It's likely also the reason why we got A19 / A19 Pro / M5 first, and we still don't have M5 Pro or M5 Max yet. Yields not high enough for M5 Max yet.
Unfortunately I don't think they bin down even lower (say, to S chips used in Apple Watches), but maybe in the future they will.
In retrospect, Apple ditching Intel was truly a gamechanging move. They didn't even have to troll everyone by putting an Intel i9 into a chassis that couldn't even cool an i7 to boost the comparison figures, but I guess they had to hedge their bet.
No, that's entirely wrong. All of those are different dies. The larger chips wouldn't even fit in phones, or most iPad motherboards, and I'm not sure a M4 Max or M4 Pro SoC package could even fit in a MacBook Air.
As a general rule, if you think a company might ever be selling a piece of silicon with more than half of it disabled, you're probably wrong and need to re-check your facts and assumptions.
If Nvidia pays more, Apple has to match.
Not a system that necessarily works all that well if one player has a short-term ability to vastly outspending all the rest.
You can't let all your other customers die just because Nvidia is flush with cash this quarter...
The flat line prediction is now 2 years old...
However, everyone knows that good faith reciprocity at that scale is not rewarded. Apple is ruthless. There are probably thousands of untold stories of how hard Apple has hammered it's suppliers over the years.
While Apple has good consumer brand loyalty, they arguably treat their suppliers relatively poorly compared to the Gold standard like Costco.
I’m not saying you’re wrong but you’re previous paragraph sounding like you were wondering if it was the case vs. here you’re saying it’s known. Is this all true? Do they have a reputation for hammering their suppliers?
That's the take I would pursue if I were Apple.
A quiet threat of "We buy wafers on consumer demand curves. You’re selling them on venture capital and hype"
https://www.manufacturingdive.com/news/intel-layoffs-25-perc...
Apple can and should do it again!
It will likely be a naval plus air blockade to force a political solution to avoid the messiness of an invasion, but time is on China's side there.
Long term: demographics are worsening for China relative to now or 5 years ago.
Short term: China doesn’t yet have viable homegrown replacements for ASML, TSMC, etc.
Really short term: China blockading Taiwan and suffering the economic fallout would be much more painful than US blockading Cuba/Venezuela/etc.
A decisive kinetic action or a very soft political action, rather than a blockade seems more viable in the current state.
It’s very possible that they will be able to dominate South China Sea and their zone of the Pacific, even now, given the proximity advantages and ship/missile production; and I think that would be satisfactory to them.
20 years from now, China’s sphere and America’s sphere are separate, with China having a lead in competing for Africa, and Europe in a very weird place socially, economically, demographically, and WRT Russia/US competition.
I'm not like, rooting for this, I'm just trying to be realistic.
If or when China’s economic and/or demographics issues become problematic is exactly when the CCP likely would want to strike. At least seems to me like it’d be a good time to foment national pride.
Of course hopefully I’m wrong and you’re right.
Many of these larger geopolitical things are decades in the making. Even Trump’s Venezuela action has been a long time brewing. So much so that “US troops in Venezuela” has become a trope in military sci-fi. The primary change with Trump is how he presents and/or justifies it, or rather doesn’t.
What options do you suppose the military might be working on? Training to surround, and blockade? (Check) Information warfare? (Check) Building high numbers of landing craft? (Check) Building high numbers of modular weapon systems that can rapidly increase the number of offensive ships? (Check) Building numerous high volume drone warfare ships and airborne launchers? (Check)
Keep in mind that there are public language cues that preceded invasion such as declarations of the invalidity of the other country’s sovereignty, declarations that the other country is already part of the invading country. Have you seen any signs of that?
Your persistent doubts require ignorance of strong evidence.
The US can't even remotely come close to stopping China in its own backyard today, in another 5-10 years they'll just have that much larger of a Navy. The US knows that's the situation. The US can supply a large one week bombing campaign against China and that's it, based on inventory levels. The US will exhaust its cruise missile supply instantly and the US has almost no meaningful drone-bomb supply. China can build cheap missiles by the tens of thousands perpetually, train them to the coast, and flatten Taiwan and any opponents as necessary. China is the only country that can sustain a multi-year WW2 style bombing campaign today, thanks to its manufacturing capabilities. Imagine them on a full war footing.
USA has been strategically re-homing TSMC to the US mainland for a long time now. 30% of all 2nm and better technologies are slated to be produced in Arizona by 2030.
The real loser in all of this will be the EU which will be completely without the ability to produce or acquire chips. They'll just end up buying from China and USA, which will only further deepen their dependence on those countries.
It’s too old, too complacent, and too broke. Even compared to the US and our level of discord, there’s no unity across divisions.
The US absurdly threatens Greenland, but Denmark/EU’s response is “Sanction US tech or kick out US military bases on Europe”, rather than be able to rattle a saber back and show some credible backbone.
They sent warships to Greenland. What level of saber rattling do you expect?
China absorbing Taiwan (especially to Americans) just doesn’t seem like a radical, terrifying concept.
A Hong Kong style negotiated transfer might be best for the world - Taiwanese that want to leave can, the US can build up a parallel source of semiconductors, China gets Taiwan without firing a shot.
My conspiracy theory is that there is some kind of "gentleman agreement" on this topic between the US and China.
As soon as Taiwan is not needed anymore by the US for chip fabrication, the US will at the very least loose their grip on it.
Note to commenters: that's my theory, does not mean I endorse it in any way.
So report the facts but sentences like "What Wei probably didn’t tell Cook is that Apple may no longer be his largest client" make it personal, they make you take sides, feel sorry for somebody, feel schadenfreude... (as you can observe in the comments)
How do you think it got in the LLM training set in the first place?
Okay, but this isn't a news article, it's an opinion piece on some guy's substack.
Intel has even struggled with it since they traditionally didn’t sell capacity to other buyers. It worked for Intel because they traditionally had a near-monopoly over the laptop, desktop, and server chip market.
Apple certainly has the money to spin up their own chip fabricator, but there’s no guarantee it would be as good as TSMC, it would cost billions, and they would have less of an ability to sell capacity to other customers.
At the end of that effort they could be left with a chip fab that produces chips that still cost the same or more than what TSMC manufactures them for. It might just be cheaper to try and outbid Nvidia for priority.
https://appleinsider.com/articles/25/08/22/apple-chips-to-be...
Apple's investing heavily in the TSMC fab in Arizona, due to open in 2027, to have 3nm capabilities for its flagship chips, but it's unlikely that would ever cover a majority of that chipmaking.
https://www.aztechcouncil.org/tucson-chipmaker-tsmc-arizona-...
https://wccftech.com/tsmc-plans-to-bring-3nm-production-to-t...
That would ruin TSMC and others' independence.
Nvidia already did buy Intel shares so it is a thing.
Nvidia did discuss with TSMC for more capacity many times. It's not about financing or minimum purchasing agreements. TSMC played along during COVID and got hit.
As far as I know there was never a demand dip at any point in there.
Which barely impacts TSMC. Most of their revenue and focus is on the advanced nodes - not the mature 1s.
> As far as I know there was never a demand dip at any point in there.
When did I imply there was a demand dip? I said they built out too much capacity.
I know about the existence of the initiative but I don't know how it is progressing / what is actually going on on that front.
There's ~a dozen in the works or under construction
TMSC plans to have 2-3nm fabs operational in the next 2-3 years
So we're 2-3 years behind the standard (currently 2nm), and further behind on the bleeding edge sub-2nm fabs
Then the essential skilled personnel can’t come train people because the visa process was created by and is operated by the equivalent of four year olds with learning disabilities. Sometimes companies say fuck it we’re doing it anyway and then ice raids their facility and shuts it down.
I’d post the news articles about th above, but your googling thumbs work as well as mine.
I really don't care about most new phone features and for my laptop the M1 Max is still a really decent chip.
I do want to run local LLM agents though and I think a Mac Studio with an M5 Ultra (when it comes out) is probably how I'm going to do that. I need more RAM.
I bet I'm not the only one looking at that kind of setup now that was previously happy with what they had..
Data is saying demand >>>>> supply.
I’m not saying this is bad or anything, it’s just another iteration of the centralized vs decentralized pendulum swing that has been happening in tech since the beginning (mainframes with dumb terminals, desktops, the cloud, mobile) etc.
Apple might experience a slowdown in hardware sales because of it. Nvidia might experience a sales boom because of it. The future could very well bring a swing back. Imagine you could run a stack of Mac minis that replaced your monthly Claude code bill. Might pay for itself in 6mo (this doesn’t exist yet but it theoretically could happen)
Apple:
2023 A16, A17 Pro, M2, M3 ~330M ~135 ~4,455M
2024 A17 Pro, A18, M3, M4 ~350M ~150 ~5,250M
2025 A18, A19 (pre-launch), M4 ~415M ~200 ~8,300M
NV:
2023 Ada (RTX 40), Hopper ~60M ~280 ~1,680M
2024 Hopper (H100), Blackwell ~85M ~450 ~3,825M
2025 Blackwell (B200), Rubin ~105M ~775 ~8,135MAs would almost innumerable others.
You're setting yourself up for making a huge part of your future revenue stream being set aside for ongoing chipfab capex and research engineering. And that's a huge gamble, since getting this all setup is not guaranteed to succeed.
I wonder what will happen in future when we get closer to the physical "wall". Will it allow other fabs to catch up or the opposite will happen, and even small improvements will be values by customers?
Also Nvidia's margins are higher which means that they will be willing to pay a higher unit price.
This seems like an open and closed case from TSMC's side.
I don’t know the hedge to position against this but I’m pretty sure China will make good on its promise.
Buy in-demand fab output today, even at a premium price and even if you can't install or power it all, expecting shortages tomorrow. Which is pretty much the way the tech economy is already working.
So no, no hedge. NVIDIA's customers already beat you to it.
> Apple-TSMC: The Partnership That Built Modern Semiconductors
In 2013, TSMC made a $10 billion bet on a single customer. Morris Chang committed to building 20nm capacity with uncertain economics on the promise that Apple would fill those fabs. “I bet the company, but I didn’t think I would lose,” Chang later said. He was right. Apple’s A8 chip launched in 2014, and TSMC never looked back.
https://newsletter.semianalysis.com/p/apple-tsmc-the-partner...
I get why the numbers are presented the way they are, but it always gets weird when talking about companies of Apple’s size - percent increases that underwhelm Wall Street correspond to raw numbers that most companies would sacrifice their CEO to a volcano to attain, and sales flops in Apple’s portfolio mean they only sold enough product to supply double-digit percentages of the US population.
The giant conglomerates in Asia seem more able to do it.
Google has somewhat tried but then famously kills most everything even things that could be successful if smaller businesses.
Every time a CEO or company board says "focus," an interesting product line loses its wings.
I think Asian companies are much less dependent on public markets and have as strong private control (chaebols in South Korea for example - Samsung, LG, Hyundai etc).
If you look at US companies that are under "family control" you might see a similar sprawl, like Cargill, Koch, I'd even put Berkshire in this class even though it's not "family controlled" in the literal sense, it's still associated with two men and not a professional CEO.
So now Apple, Nvidia, AMD (possibly), and most car manufacturers will be up a creek without a paddle when China invades in 1-2 years. That is unless China's Xi is bluffing to mollify domestic war hawks and reunification zealots by going through the motions of building an army of war machines without intent to use them, but I don't think that's probable. It's possible that Trump already made agreements with Xi to cede "Oceania" if they allow the US to take Greenland and South America for empire-building neocolonialism.
outside1234•1h ago
(Apple is well known for shoving "lesser vendors" out of the way at TSMC)
ericmay•1h ago
outside1234•1h ago
cowsandmilk•1h ago
landl0rd•46m ago
knowitnone3•36m ago