[HN Gopher] Apple is America's semiconductor problem
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Apple is America's semiconductor problem
Author : yedava
Score : 92 points
Date : 2024-08-08 20:00 UTC (3 hours ago)
(HTM) web link (www.semiconductor-digest.com)
(TXT) w3m dump (www.semiconductor-digest.com)
| jmclnx wrote:
| The article makes sense to me. Apple has such a large marketing
| clout, they are able to set the prices.
|
| So prices are so low, they can only be made using boarderline
| slave labor.
| soulofmischief wrote:
| Are we buying the same devices? Apple hardware is notoriously
| expensive.
| csande17 wrote:
| The article suggests Apple is using its buying power to push
| _component_ prices down, so that it can keep more of the
| profit on its expensive smartphones for itself.
| soulofmischief wrote:
| I appreciate you and the other commenter for correcting me,
| thank you. That makes much more sense.
| WheatMillington wrote:
| Apple can set prices for their vendors/suppliers.
| wil421 wrote:
| Sounds like the tech version of Walmart killing the small town.
| Except they kill American "tech manufacturing" or whatever you
| want to call it.
|
| It's 100% about borderline slave labor pay. I used to think it
| was because chip manufacturing is very nasty but I think it's
| both pay and subpar working conditions.
| bonestamp2 wrote:
| > Except they kill American "tech manufacturing" or whatever
| you want to call it.
|
| This is the part I don't understand... they have placed
| orders with the new fabs that aren't even built yet. How are
| they killing American manufacturing if there is no American
| manufacturing for them to buy from?
| microtherion wrote:
| And it's not just isolated factories. There is a whole
| ecosystem of interrelated manufacturing & assembly
| companies that you would have to transplant to the US.
|
| And I keep hearing that there are hundreds of thousands of
| people working on iPhone assembly. I can't even imagine how
| long it would take to replicate such a workforce in the US.
| Wages aside, this seems to be rather exacting, meticulous
| work with limited paths of advancement. Where are these
| laborers going to come from?
|
| As Steve Jobs is reported to have told Barack Obama in
| 2010: "These jobs are not coming back".
| wil421 wrote:
| It's political theater. The tide is swaying towards US
| fabs. What about the past 15+ years? The capability is gone
| for a lot of it.
|
| As Obama put it, "Those jobs aren't coming back".
| Jtsummers wrote:
| Apple is getting 50%+ profit off of their phones. Not sure
| their other device categories, but it's probably similar
| especially with their relentless streamlining of the internals.
| Moving iPad and all their computers to the same chip family
| (and manufacturing maybe 2 generations at a time with little
| overlap), for instance, gives them a substantial (potential)
| savings across all those product lines due to the combined
| scale.
| geoffpado wrote:
| Apple makes 35.3% gross margin on products, per their latest
| earnings call. Transcript here:
| https://sixcolors.com/post/2024/08/this-is-
| tim-q3-2024-analy...
|
| While they make a gross margin of 46.3% overall, that's
| mostly buoyed by the high margin on services, not on the
| products.
| duxup wrote:
| > Apple has such a large marketing clout
|
| I think their products are genuinely competitive. It's not just
| marketing.
| vundercind wrote:
| I was a Windows and Linux user for nearly two decades before
| really giving Mac an shot, and still engage regularly with
| both. My first smartphones were Android. I've done tons of
| development work on both the iOS and Android platforms, and
| been exposed to a mountain of devices from both.
|
| As far as I'm concerned nobody's even trying to compete with
| Apple. There are other personal computing products but none
| of them address the same market as Apple at all. The _tiny_
| set of possible competitors for their space all seem to have
| decided not to even try.
|
| [edit] and, to be clear, I'd very much prefer that they had
| competition in their segment. Even if I stuck with them, it'd
| at least put competitive pressure on them to improve and/or
| cut prices.
| necovek wrote:
| That's a weird look. What is that market segment nobody is
| even trying to compete in?
|
| Integrated ecosystem is something a number of players have
| tried and failed at, as they simply don't have the
| resources to build it up and sustain it until they are
| competitive.
|
| Apple has started small too: tiny little iPods with iTunes
| + digital content sales really put them back on the map,
| before they scored a hit with iPhone which was an iPod
| touch with a modem. They have been riding the iPhone wave
| since, gobbling up money with iPhone and iPad manufacture
| and app sales, which allowed them to expand to SoC
| production for laptops too, which is what got them back on
| the PC (as in "personal computer") map too.
| Jtsummers wrote:
| > iPhone which was an iPod touch with a modem.
|
| I mean, that's not totally wrong, but by the release
| dates completely backwards. The iPod Touch is an iPhone
| without the modem.
| necovek wrote:
| Sure, iPod touch was not much of a difference maker, and
| I am likely misremembering the dates.
| stephenitis wrote:
| Apple is a large beast for sure.
|
| With as much expertise as the author has. I didn't read solutions
| or ways forward. I suppose the main objective is awareness?
| sqeaky wrote:
| I think a solution is something the government needs to do, I
| don't believe there is a free market solution to a problem
| caused specifically by a free market.
| riffraff wrote:
| It's mentioned towards the end,the author suggests extra taxes
| on phones made with all chips sourced from abroad.
| bonestamp2 wrote:
| It's a strange article. The title says Apple is the problem
| with the domestic chip industry and then goes on to state how
| Apple put in orders from both of the new domestic fabs 1-2
| years ago.
|
| Then it goes on to state that Apple stole technology when that
| is not actually a fact -- it's part of an ongoing legal battle
| that hasn't been proven (innocent until proven guilty in
| America right? Right?).
|
| So, it just comes across as a weird hit-piece with some pretty
| shaky arguments.
| wrsh07 wrote:
| If you're talking about America's semiconductor problem and not
| mentioning Intel even once, your view is horribly horribly
| slanted
| diggan wrote:
| Or, the focus is on another company? Just because you talk
| about Boeing doesn't mean you need to bring up every single
| competitor to Boeing, no?
| AnimalMuppet wrote:
| If you say Apple _is_ America 's semiconductor problem,
| that's a bit stronger than just "the focus is on another
| company". The focus is on another company to the exclusion of
| all else, and that exclusion is creating a rather distorted
| picture of the actual situation.
| Arn_Thor wrote:
| Apple was an Intel customer. Talking about Apple's role in
| the semiconductor sector MUST include Intel because one must
| explain how and why Apple decided to develop their own (first
| mobile, then computer) chips in the first place instead of
| sticking with Intel. Why is Intel not competitive? THAT
| question seems much more pertinent to America's chip travails
| zamadatix wrote:
| I don't think chip design conversation, particularly for
| mobile, really have much to do with the semiconductor
| production conversation. Sticking with that theme when
| Apple was doing their own mobile CPUs with ARM Intel's
| semiconductor fab capabilities were industry leading.
|
| I think Intel probably deserves a mention in the article
| but that line of question feels like the wrong angle of
| approach for it.
| hedgehog wrote:
| Intel was the last company to have domestic leading edge
| fabs and they used to be one of (the?) highest volume
| producers by wafer count so they're a pretty big part of
| any conversation about US semiconductor manufacturing.
| Another is AMD and their fab spinout as GlobalFoundries,
| and why GF stopped at 12nm.
| Jtsummers wrote:
| > one must explain how and why Apple decided to develop
| their own (first mobile, then computer) chips in the first
| place instead of sticking with Intel.
|
| Re mobile:
|
| 1. Timelines. Apple only transitioned to Intel in 2006 on
| their computer side, the first iPhone was announced in
| 2006. As a company they had little overall Intel
| experience. There was no "sticking with Intel" because
| they'd just switched to Intel concurrent with the
| development and release of the iPhone
|
| 2. iPod. Apple's prior mobile devices were already using
| ARM processors. That's a lot of experience and existing
| supply chain connections to take advantage of.
|
| 3. Mobile Intel chips sucked. They drew too much power and
| were not suitable at that time for a mobile device like a
| phone (already more power hungry with the wireless
| components compared to something like an iPod).
| creddit wrote:
| It's Matt Stoller. Never expect an honest, non-agenda driven
| perspective.
| pier25 wrote:
| Or Qualcomm. Globally there are way more Android phones sold
| than iPhones (Samsung + Xiaomi + Oppo + etc).
|
| https://www.canalys.com/newsroom/global-smartphone-market-q1...
| sqeaky wrote:
| I find the article compelling. He cited a lot of other articles,
| isn't making outrageous claims, provided concrete numbers, and
| isn't spinning unrealistic conspiratorial claims. The only core
| feature of human behavior we need to accept to believe the
| article is that some people are very greedy.
| hedgehog wrote:
| I thought it was weak, his core argument seems to boil down to
| the idea that if there were more domestic competition then
| device manufacturers would somehow be willing to buy worse
| chips for more money. It just doesn't make any sense. The woes
| of Intel, Micron, etc are nobody's faults but their own.
| sqeaky wrote:
| If there were more domestic producers would their chips still
| be worse?
| bonestamp2 wrote:
| > He cited a lot of other articles, isn't making outrageous
| claims
|
| One of these citations isn't even about chips, but he kind of
| implies it is. Not to mention, he said that apple stole
| technology. That has not been proven, the court case hasn't
| happened yet. Citing sources out of context, and making untrue
| claims about what the source says, makes the article less
| compelling in my opinion.
| gvkhna wrote:
| Intel also worked on modems for a long time, ultimately
| abandoning it and selling it to Apple, who has also not been able
| to bear fruit with that yet. Modems are hard but Intel with their
| experience could've stuck it out and had a competitive modem chip
| but instead focused on short term profits which have evaporated
| now. Note I own shares in both companies.
| bgnn wrote:
| AFAIK Intel went into modem business with Infineon wireless
| acquisition at 2015, which was doing fine but dold due to
| global financial crisis. Intel, as always it does with
| acquisitions, turned this acquired business into a money pit.
| They forced all the designs to be ported to Intel fab processes
| but Intel fabs didn't care about any design business especially
| a side design (unlike TSMC). Apple leveraged Intel wireless as
| a bargaining chip against Broadcom and Qualcomm. At the end
| Apple acqui-hired the people from this unit. I see that Apple
| is much more serious than Intel to get it done.
| brigadier132 wrote:
| The kind of monopoly apple has is interesting. In the US Apple
| has a complete monopoly on customers that spend money.
|
| If your app shows ads, apple customers are more valuable.
|
| If your app sells any kind of product apple users buy more.
|
| Market power is not determined by the number of users but by
| control of revenue.
| WheatMillington wrote:
| Nothing you mentioned could be described as a monopoly.
| Monopoly has a definition, we can't just make it up as we go.
| xyzzy123 wrote:
| When a supplier has oursized market power that's monopoly.
|
| When a _buyer_ has outsized market power it 's called a
| monopsony.
|
| I guess that's the concept gp is reaching for.
| brigadier132 wrote:
| I don't know the right way to describe it but Apple is the
| gatekeeper to their customers. I think it's accurate to say
| they sell access to their customers.
| szundi wrote:
| No no, it's when there's no one else to buy from
| xyzzy123 wrote:
| I'n saying that from a chip supply perspective Apple is
| "monopsony-ish" since they control so much of the demand
| for chips. This is probably true in many areas of their
| supply chain.
|
| The "smell" of a monopsony is the ability to squeeze
| suppliers to the point of having the power to drive them
| out of business if they don't meet your terms.
| blackeyeblitzar wrote:
| We can certainly alter definitions when they're not useful.
| Anti competitive situations are more complicated these days
| and redefining this word that is commonly used to point at
| this type of platform may be overdue. We obviously see
| definitions change for political reasons all the time these
| days so I'm not sure why we would avoid it here.
| bsder wrote:
| The definition of monopoly has changed drastically over the
| course of time and will continue to do so.
|
| Regardless of what you call it, any market vertical that you
| can define with less than 5 genuine competitors invariably
| winds up being anti-consumer and needs to get broken up.
|
| Apple is the focus here, but Google is no better and neither
| is Microsoft. Search, messaging, email, video--all of these
| are easily definable market verticals.
|
| _All_ of these need to get broken up until we have at least
| a half-dozen competing companies in those spaces.
|
| This isn't limited to tech. Grocery store chains, industrial
| suppliers, financial companies, etc. all need to get smacked
| with the same breakup stick--especially if we want not just
| to not only stomp out anti-consumer behavior but also to have
| genuine supply chain resilience.
| darklion wrote:
| > All of these need to get broken up until we have at least
| a half-dozen competing companies in those spaces.
|
| You seem to be forgetting, we had your "at least a half-
| dozen competing companies" situation in the past. It was
| called the late 2000s and the early 2010s. And the reason
| it disappeared is not the traditional "everybody merges
| until only two or three are left standing", it's because
| iOS and Android were so much better than the competition
| that every other phone manufacturer starved to death or
| switched to Android.
|
| By the time a new generation of smartphones with
| sufficiently-equivalent OSes had arrived -- in the form of
| webOS and Microsoft Phone -- iOS and Android were so
| established the newcomers couldn't successfully compete.
|
| Even today, while there are only two major OSes, there are
| still numerous successfully competing manufacturers:
| Samsung, Google, Apple, OnePlus, BLU, Lenovo/Motorola,
| Huwaei, Xiaomi, Vivo, Oppo, etc. They all make mobile
| phones, with varying levels of market share across the
| world.
| bsder wrote:
| > it's because iOS and Android were so much better than
| the competition that every other phone manufacturer
| starved to death or switched to Android.
|
| I would argue that it was because Apple and Google could
| cross-subsidize the market from their other buisnesses.
|
| Google viewed the ISPs as an _existential threat_ and saw
| both mobile and fiber as a way to disintermediate them.
| Apple saw phones as an existential threat to iPod which
| was a huge chunk of their revenue.
|
| Google didn't release Android until 2008. As of 2009
| Nokia still had 33% market share and even Samsung(13%)
| and RIM (15%) beat Apple (11%).
|
| > iOS and Android were so established the newcomers
| couldn't successfully compete.
|
| That is practically the _definition_ of monopoly, you
| know?
| necovek wrote:
| Monopoly is not the same as anti-competitive tactics:
| monopoly is simply a control of a market segment, and while
| GP was using it a bit freely, affluent phone users are
| certainly a market segment.
|
| A monopoly using anti-competitive tactics attracts regulatory
| review, but anti-competitive tactics are forbidden for both
| small and large companies.
| rice7th wrote:
| I guess apple works more as a "cultural monopoly", where if you
| don't own some apple device you're automatically ostracized by
| other apple customers. To them apple is more like a fashion
| clothing company like gucci than a technological one. Apple
| provides some sort of "privileged status" to their customers,
| just like purpur in ancient rome, so of course each apple stan
| considers themselves superior, and to keep their own privilege
| they need to buy more apple products.
| tstrimple wrote:
| What a bunch of nonsense. I don't buy Apple products because
| someone might make fun of me if I don't. It's because they
| are best in class and integrate so much better than any
| competing offering.
| kwhitefoot wrote:
| Good for you. That doesn't change the impression that many
| of us have when we see relatives and friends who buy Apple
| products yet have low incomes. I'm pretty confident they
| aren't doing it because of any technical superiority and
| they certainly aren't doing it because the devices last
| since they upgrade every couple of years.
|
| > integrate so much better
|
| Integrate with what?
| freedomben wrote:
| > _Integrate with what?_
|
| with other Apple products of course!
| matwood wrote:
| Wow. I think your comment says more about you than anyone who
| owns an Apple device.
| ToucanLoucan wrote:
| > With this position, Apple uses its outsized buying power to
| squeeze the margins of its suppliers such as Foxconn, leading to
| poor pay and terrible working conditions in Chinese factories.
|
| I'm sorry what? Poor pay and working conditions in the
| semiconductor hubs of China has been a problem as long as and
| before Apple made the iPhone. Apple certainly isn't HELPING that
| situation, but none of them are. All these fabs have made the
| news at different times for everything from suicide prevention
| nets to using slave labor to make Apple products, sure, along
| with every other major tech OEM in the business. I'd be shocked
| if you could find ANY large manufacturer of these things that
| hasn't been embroiled in one scandal or another over shitty
| conditions in their factories.
|
| > Even for the American suppliers who have managed to stay in
| business, things are hard. With Apple accounting for most or all
| of the revenue of many of its suppliers--by buying most of their
| output and blocking its competitors from using similar components
| --suppliers "dare not put a foot wrong" by speaking against
| Apple, or even mentioning it by name.
|
| Then how do you know if they refuse to talk about it? This feels
| like a piece banking on outrage clicks about Apple.
|
| > In 2017, when Apple announced it was moving away from using UK-
| based Imagination Technologies for graphics processors, the
| company lost two thirds of its value overnight. Apple's monopsony
| power means component suppliers have few buyers.
|
| Yeah, Intel lost a bunch on the stock market too when Apple
| announced they were rolling their own silicon. Losing Apple as a
| client is _absolutely going to suck_ for any supplier and a stock
| dip makes perfect sense in that situation.
|
| Like, none of this is strictly wrong but it's just describing the
| highly centralized nature of this industry. None of this is
| unique to Apple. I'm sure Samsung would have no issues at all
| swinging suppliers by the tail if they were so inclined to do
| everything outlined here, and I'm sure they have too.
|
| Edit: TIL about the word monopsony.
| bryanlarsen wrote:
| > None of this is unique to Apple.
|
| It's not unique to Apple, but Apple is far better at it and far
| more focused on it than anybody. It's Tim Cook's particular
| strength, why he took over after Jobs died and has been a major
| focus of the company.
| lwkl wrote:
| Monopsony is the correct term here it means that there is only
| one buyer. A monopoly means that there is only one seller.
| ToucanLoucan wrote:
| Huh. Spell check doesn't know that word I guess, only reason
| I even caught it.
| Jtsummers wrote:
| Monopsony is correct in that case, meaning one buyer. The
| argument being that Imagination Technologies essentially had
| one buyer due to Apple's outsized demand for their component.
| When Apple left, their demand was substantially reduced with no
| one (or group) to pick up the slack. TSMC is in a better
| position, everyone is clamoring for their products (or really
| their services and production capabilities) so if Apple left
| they'd hurt a bit, but all the other buyers would be thrilled
| and TSMC would see a blip for maybe a quarter.
| WheatMillington wrote:
| >Poor pay and working conditions in the semiconductor hubs of
| China has been a problem as long as and before Apple made the
| iPhone. Apple certainly isn't HELPING that situation, but none
| of them are.
|
| When the dominant player comes to town specifically BECAUSE of
| these terrible conditions and low prices, and use their market
| power to push prices even lower, they are absolutely part of
| the problem.
| peppertree wrote:
| Apple is a proxy of what people want. The Soviet has already
| tried top down supply chain management and it did not work.
| blackeyeblitzar wrote:
| When companies are so big that their value is measured in the
| trillions I think the line between the two is blurry. These
| companies are managed top down internally after all, so they're
| just a smaller "Soviet" situation.
| peppertree wrote:
| The key difference is corporations are managed top down by
| competent actors that understand the market, and there's
| consequence to mismanagement.
| rlili wrote:
| > and there's consequence to mismanagemen
|
| Except if you're a company so large that the government has
| no choice but to bail you out in a crisis.
| xboxnolifes wrote:
| The difference appears in failure. 100,000 companies can
| bankrupt before reaching a single $1 trillion company and
| that's just markets working as intended. But the government
| doesn't get that failure mode, at least it's generally not
| approved of. Apple wasn't, and isn't, the only company trying
| to be in their position, but they _are_ one of the few
| trillion dollar companies.
| sashank_1509 wrote:
| Lol, maybe the author should ask himself if we ban Apple will we
| then see the American semiconductor industry boom and take over
| the world?
|
| If not, then the logic is strenuous at best, you just viscerally
| hate Apple and want to find reasons to blame it as opposed to
| doing anything constructive for the American Semiconductor
| Industry. Something constructive would involve fixing the work
| ethic of American Semiconductor Factory employees which seems to
| be heavily lacking compared to their Taiwanese counterparts, a
| problem that we don't see with say the AI workforce or any upper
| order white collar workforce.
| necovek wrote:
| You don't "ban Apple", you ban some of the tactics and
| behaviors they are exhibiting. They mention as positive
| examples US government banning trade with a Chinese memory chip
| fab (which was receiving subsidies from government to maintain
| a 20% lower price) which "forced" Apple to rely on an American
| fab (that's the implication, even if both Micron and South
| Korean Samsung are mentioned).
| carlmr wrote:
| >fixing the work ethic of American Semiconductor Factory
| employees
|
| How do you pinpoint this to be the problem? How are you sure
| that it's not some narrative used by corporate to excuse
| outsourcing or putting pressure on wages?
|
| I think an industry where technical knowledge was outsourced
| for cost cutting reasons for decades now is probably having
| issues because only the managers are left, and they're not
| productive on their own. Blaming it on the factory worker seems
| uncalled for.
| ctoth wrote:
| Was I the only person who saw this article was by Pete Singer and
| was briefly deeply confused? Why does the OG EA guy care about
| ... Oh. No R.
| duxup wrote:
| I have zero doubt Apple's influence is considerable and maybe
| monopolistic or something like that in a number of ways.
|
| But I find an article that doesn't even address any other
| companies a little hard to swallow. Are other companies simply
| not able to "reshore" chip fabs?
|
| I have no idea what some of the tidbits thrown in about the apple
| watch has anything to do with the topic. Let alone some of the
| heavy handed lines in the article that simply aren't supported as
| far as I can tell.
|
| Some of the lines in this article seem borderline hysterical...
| refulgentis wrote:
| > Are other companies simply not able to "reshore" chip fabs?
|
| Intel has fabs in the US, doesn't seem to me after a couple
| readings that the article isn't about CPU fabs, its about the
| semiconductor supply chain.
|
| > Some of the tidbits thrown in about the apple watch has
| anything to do with the topic
|
| They seem part and parcel with ex. the App Store mentions,
| antitrust, and monopoly references.
|
| > Let alone some of the heavy handed lines in the article that
| simply aren't supported as far as I can tell.
|
| Such as?
| causal wrote:
| Yeah I'm a little confused by the premise. How would reshoring
| chip production be easier if Apple weren't out there buying
| chips? I get that they are buying up all of the TSMC chips in
| some segments. Doesn't that just create demand for an
| alternative? I can't cohere the themes of this article.
| necovek wrote:
| The point there seems to be that Apple is pretending to
| invest and align with moving production to US, but it's
| really gobbling up the entire foreign production and not at
| all interested in the "patriotic" narrative, even if they are
| marketing themselves as such.
|
| Basically, it's mostly: Apple is lying with their marketing,
| here's what proves they really don't care about moving
| production to US, but only about price and their profit
| margins.
| causal wrote:
| That much seems easy to believe, I just find it hard to
| connect that to an obstacle for domestic chip production
| rbanffy wrote:
| Tim Cook has an obligation towards the shareholders and
| takes it seriously. As an Apple shareholder who doesn't
| live in the US, moving to US chip suppliers would not help
| with his obligations towards me.
|
| I do like the US - don't get me wrong - but Apple is in the
| business of making devices, not making investments the
| government should be at least facilitating.
| e44858 wrote:
| That's why we need tariffs, to make Apple suffer
| financially if they refuse to move production back to the
| US.
| Barrin92 wrote:
| >How would reshoring chip production be easier if Apple
| weren't out there buying chips?
|
| Because Apple's dominant position as a monopsonist means it
| has price setting power and depresses the profits in the chip
| industry, making all but the cheapest locations effectively
| unsustainable. Monopsonists essentially absorb the profits of
| their suppliers. This is for example why nationalized health
| services are cheap.
| kergonath wrote:
| This does not sound like a complete picture. Apple might
| depress the prices for themselves, but not for other fab
| customers. On the contrary, if there is a supply issue,
| with one customer getting all the production, then prices
| should go up overall, helping competing fabs. In a
| situation with a huge production shortfall, it becomes a
| matter of initial capital, with which governments can help
| effectively (either with subsidies or with tax incentives).
| If the customers are there and demand is strong, eventual
| RoI should be ok.
|
| In your example, not only has the government huge
| bargaining power, but the law itself limits other
| customers, and this there is no demand outside of the
| government. In contrast, there are plenty of customers for
| semiconductors. Demand is still here.
|
| So yes, Apple might reduce TSMC's margin, but the real
| problem is not that. It's that there is nobody else
| operating on the same scale. The fact that there is no
| alternative for cutting edge nodes is a sign of a market
| failure.
|
| Besides, this "it's Apple fault and they depress margins"
| sounds disingenuous. Apple famously invested quite a lot in
| TSMC's fabs in exchange for this access to the latest
| nodes. And TSMC also benefits from stable, predictable
| demand. The real problem is the spectacular failure of
| Intel and the complete lack of effectiveness of the handful
| of governments that could do something. Things seem to be
| changing, even if it is slow, but we should never have been
| in that situation in the first place.
| Barrin92 wrote:
| >but not for other fab customers
|
| there aren't that many, that's the point. Apple is
| responsible for most of its suppliers revenue as the
| article points out, otherwise it wouldn't have price
| setting power to begin with.
|
| We aren't in a supply shortage, with the exception of a
| bunch of AI related chips (the only thing the media talks
| about, hence the skewed perception) we've bin in a supply
| glut. Semiconductor revenue declined by 11% last year. AI
| chips aren't the only chips in the world, DRAM makers
| like Micron, an American manufacturer are the kinds of
| companies that are effectively at the mercy of Apple
| because of how outsized of a portion of the market they
| are.
| windexh8er wrote:
| It's not just TSMC chips. Apple forces other chip
| manufacturers into exclusive deals to lock out the ability
| for 3rd party repair to be done cost effectively and
| reliably. Apple shouldn't be able to control the chip markets
| as they do. As indicated in the article they create slave
| labor conditions in a lot of these manufacturers because
| they're wholly dependent on Apple's whims. This also creates
| an e-waste problem globally as Apple inhibits the ability to
| more easily repair their hardware. Louis Rossman has some
| great examples [0] of Apple continuing to put defective
| hardware into devices that Apple knows will, and has, failed
| and there is no easy way to replace these components because
| Apple has locked up the supply chain via purchasing all
| available inventory and having exclusive rights to non-
| proprietary chips. This means you can't repair a device you
| own at a fiscally fair price. Instead you're forced into
| buying an entire assembly so Apple can charge a much higher
| multiple on a part that has higher margins which may just
| force you to buy an entirely new product because of the price
| point differential.
|
| [0] https://youtube.com/watch?v=Z0DF-MOkotA&feature=shared
| rbanffy wrote:
| > Apple inhibits the ability to more easily repair their
| hardware.
|
| This is why we need right-to-repair legislation with teeth.
| daft_pink wrote:
| I agree. I feel the quality of the article leaves something to
| be desired knowing that semiconductors are purchased by so many
| different players. Feels like a hit piece.
| kergonath wrote:
| > Feels like a hit piece.
|
| The title tends to give this impression, to be honest.
| rbanffy wrote:
| The content kind of seals the deal. It is a hit piece.
| jocaal wrote:
| > But I find an article that doesn't even address any other
| companies a little hard to swallow. Are other companies simply
| not able to "reshore" chip fabs?
|
| I urge you to look at the earnings of some of the most popular
| chip manufacturers and then look at the earnings of apple (also
| ignore nvidia as it is an obvious outlier). Creating a modern
| chip fab takes A LOT of money and is simply impossible when
| some of the most popular semi companies struggle to even make a
| small profit. TSMC's fabless business model allows many chip
| companies to share the capital investment required, but apple
| just straight up has the money to make the investments but
| choose not too. Also it would be quite scary if apple is
| allowed that type of vertical integration.
| iamacyborg wrote:
| > Also it would be quite scary if apple is allowed that type
| of vertical integration.
|
| Scary in what way?
| Jtsummers wrote:
| It wouldn't be. People are just afraid of vertical
| integration because they equate it to vertical monopolies,
| when the fact of vertical integration does not itself mean
| that there is a vertical monopoly.
| iamacyborg wrote:
| Loro Piana must be very scary to some people.
| rbanffy wrote:
| > Also it would be quite scary if apple is allowed that type
| of vertical integration.
|
| Why would that be? It'd free up TSMC's top shelf capacity to
| other manufacturers.
| Jtsummers wrote:
| It would also mean that Apple built a facility that will be
| outdated in 1-3 years. They'd end up falling behind and
| have to go back to TSMC or someone else to supply
| components or invest billions every year to build out
| improved fabrication facilities.
|
| Certain kinds of vertical integration can last, but when a
| key part is a moving target (fab capabilities) or
| commodified then they are inherently time limited assuming
| any kind of competition (and there is plenty of competition
| in the PC and phone markets still).
| joatmon-snoo wrote:
| Post hoc ergo propter hoc. Sure, Apple offshoring their
| semiconductor mfg compounded the US' lack of domestic
| semiconductor mfg capacity/expertise.
|
| Apple also did that because it is a _business_, and has not
| always been the behemoth it is today. They went overseas because
| it made more sense, not because they had some anti-American goal
| of crippling US mfg capabilities.
|
| The AELP is, ideologically, a anti-big-co institute, which is
| admirable but is also why this piece engages in post hoc ergo
| propter hoc rather than discussing meaningful policy proposals:
|
| > The American Economic Liberties Project launched in February
| 2020 to help translate the intellectual victories of the anti-
| monopoly movement into momentum towards concrete, wide-ranging
| policy changes that begin to address today's crisis of
| concentrated economic power
| blackeyeblitzar wrote:
| I have to say I'm glad to hear of organizations mobilizing
| around these problems. Companies above some size reduce fair
| competition just due to their size, and we need to stop wasting
| time litigating technicalities with them. Our existing laws and
| definitions fall really short of recognizing - let alone
| addressing - the problem (of how competition with them isn't
| fair, how it concentrates power, how consumers have little
| choice). It's why Microsoft can get away with bundling Teams or
| abusing Windows users with dark patterns, why Apple can get
| away with locking down the devices we own with walled gardens
| and extorting developers with App Store or payment fees, it's
| why Google can operate for two decades as a monopoly, and so
| on. This needs to change, and fast.
| EarlKing wrote:
| Yeah, it made sense to management looking to increase
| shareholder value. OTOH, since Apple isn't competing on price,
| they didn't have to do that. So everything that has ever, or
| will ever, go wrong with their devices is an entirely self-
| inflicted wound, and anyone who buys their products gets
| exactly what they deserve for buying from a company that cares
| more about profits than the people.
| FrankWilhoit wrote:
| Two hundred years ago, it was understood that national borders
| were things that neither persons, nor goods, nor money, nor
| information should _routinely_ cross. That understanding was
| correct and necessary, and must perforce be regained, after who
| knows what further unnecessary harm has been done.
| Arn_Thor wrote:
| Citations, lots of them, needed
| szundi wrote:
| Prepare to consume 1/3 rd of your present rate then
| doug_durham wrote:
| What an odd and unique view on history. The founding fathers
| routinely enjoyed imported bananas, and the economy depended on
| cotton exports.
| warkdarrior wrote:
| Do you have examples of countries from 200 years ago that had
| closed borders? In the vast majority of cases, borders were
| open, for a fee.
| limpbizkitfan wrote:
| To stupid people, a border is some sacred impenetrable wall. To
| most of us, it's just another line.
| kergonath wrote:
| You would need to provide far more than that. What are you
| alluding to? 200 years ago was the development of the nation-
| state as a concept. Borders were completely porous; the
| technology to close them effectively was more about 100 years
| in the future.
|
| Also, 200 years ago was the development of colonial empires,
| which is pretty much the opposite of what you say.
| mcphage wrote:
| > In 2017, when Apple announced it was moving away from using UK-
| based Imagination Technologies for graphics processors, the
| company lost two thirds of its value overnight.
|
| I'm not sure what the author is suggesting here. They licensed
| technology from Imagine Technologies, so therefore they must
| continue licensing their technology?
|
| Also: Imagine Technologies is a chip designer, not a chip
| fabricator. It's stuck in at the end of a paragraph about Apple's
| suppliers, but unless I'm mistaken--which I absolutely could be!
| --Imagine Technologies wasn't one. Also it's a UK company, so I'm
| not sure how Apple ending their contract with Imagine
| Technologies hurts the US's semiconductor problem.
| freedomben wrote:
| > I'm not sure what the author is suggesting here. They
| licensed technology from Imagine Technologies, so therefore
| they must continue licensing their technology?
|
| I think you're overreading it. I don't think the author is
| arguing that Apple must stay a customer. Rather they are making
| a point about how much power Apple has a company. They clearly
| have the power to make or break other companies. That of course
| doesn't make the rest of the article correct, but the point
| about Apple being very powerful does make sense to me.
| lifeisstillgood wrote:
| I'm not sure the argument holds water - it seems to be that Apple
| has huge market power (yes), and manufacturing in Western world
| basically moved to China (yes), India (yes). But it's hard to say
| this is Apples fault.
|
| If Apple had not been there, are we saying manufacturing would
| have stayed onshore - steel foundaries, car factories and chip
| manufacturers- I mean China and India account for over 3 billion
| people, who want roads, houses, cars and washing machines. Where
| else are the factories going to be - the weight of demand means
| even if US owned the factories they would still be in Guangdong.
|
| So yeah, Apple probably misuses its market power, but it's hard
| to imagine it did anything but tip the playing field further down
| the way it was already pointing.
|
| So if we tax or punish Apple, do we really think it will all flip
| back?
|
| My personal take is that energy and computing are the things that
| need to be in shored - _no matter the cost differential_.
| Industrialised counties, hopefully, will become energy
| independent (lots of solar, lots of insulation, lots fewer
| transport) and computing is going to be similar - focus on that
| verifiable secure designs
| asdasdsddd wrote:
| > Apple buys a far larger share of smartphone and computer
| semiconductors, given that it accounts for half of global
| smartphones sales and earns 85% of all smartphones
|
| I feel like I'm getting trolled by the author who is citing sales
| and profits instead of units produced as a metric.
| p1necone wrote:
| I imagine sales numbers and profits are publicly available
| information, whereas actual # of units produced is likely not
| an easy number to find?
| BenFranklin100 wrote:
| Given Android has 71% of the worldwide market share it's
| difficult to make the argument Apple holds a monopoly on the
| smartphone market [1]. Even in the US, until about 2020,
| Android had a higher subscriber base, and there is no reason
| the situation could not reverse and iOS drop below its July
| 2023 53% subscriber market share [2].
|
| Moreover, give iPhones are significantly more expensive than
| comparable Android phones, Apple's ability to claw market
| share back from Android phones over the last decade is the
| opposite of how a monopolist might operate by flooding a
| market with cheap alternatives. It speaks to a consumer
| perception that iPhones have a larger value.
|
| [1] https://gs.statcounter.com/os-market-
| share/mobile/worldwide [2]
| https://www.statista.com/statistics/266572/market-share-
| held...
| BenFranklin100 wrote:
| As a tagalong to my comment, I really wish Android phone
| makers would get their act together and give Apple better
| competition. If the trends of the last ten years hold up,
| iPhones might actually become a monopoly product at some
| point. ;)
| wrsh07 wrote:
| Can I encourage you to start the android company you want
| to see? I'm confident you can get funding
| AceJohnny2 wrote:
| > _I really wish Android phone makers would get their act
| together and give Apple better competition_
|
| Google and Samsung tried and failed. Google with their
| flagship Pixel line, which just doesn't sell well, so
| they moved downmarket. Samsung with their Galaxy line,
| but they're always playing catchup/copycat to Apple.
|
| The sad fact is that 1) Google sucks at hardware, 2)
| Samsung sucks at taste.
|
| Apple really has a magical combination of (arguably) good
| taste, and operating chops to deliver the hardware at
| scale.
| gruez wrote:
| >whereas actual # of units produced is likely not an easy
| number to find?
|
| "Global Smartphone Shipments (Millions)"
|
| https://www.counterpointresearch.com/insights/global-
| smartph...
| pie420 wrote:
| units sold dont matter when the competition is selling $100
| smartphones at a loss. The fact that one company is making 85%
| of the profits in an entire industry as massive as SMARTPHONES
| should be terrifying, but i guess we don't care about
| monopolism for some reason
| throwaway290 wrote:
| > when the competition is selling $100 smartphones at a loss
|
| That is actually terrifying, because logic dictates they make
| up profit in other ways. I can imagine how an ad company or
| nation state can go about it.
| SllX wrote:
| Monopolies are measured according to market share, not profit
| share.
| chasil wrote:
| I would like nothing better than watching the FTC take a
| scalpel to Apple.
|
| The vivisection of the PC division, the semiconductors, iOS,
| iPhone, and iPad into separate companies would be deeply
| satisfying.
|
| Shareholders might actually applaud the results in the end.
| icehawk wrote:
| Do smartphones that get sold at $100 not have chips in them?
|
| Because the article is talking about semiconductor
| manufacturing, and the total numbers of semiconductors
| purchased.
|
| Profits and monopolies are a different article.
| alephnerd wrote:
| > I feel like I'm getting trolled by the author
|
| Because it's Matt Stoller.
|
| I've commented (with citations) enough on HN about Stoller's
| biases and issues around analysis [0][1]
|
| He's upped his content publishing the past few months now that
| he is competing with Oren Cass to change mindshare and build a
| prominent profile, but Cass is a Romney protege so he's
| limited.
|
| If Trump becomes president, Stoller is most likely going to be
| nominated as an FTC commissioner because of his close
| relationship to JD Vance [2]
|
| [0] - https://news.ycombinator.com/item?id=40624532
|
| [1] - https://news.ycombinator.com/item?id=38147499
|
| [2] - https://nationalpost.com/opinion/matt-stoller-whos-
| afraid-of...
| pessimizer wrote:
| Let me get this straight: the "close relationship to JD
| Vance" is that he wrote an article that mentioned that Vance
| said something nice about Lina Khan, and this article means
| that Trump will "most likely" fire Lina Khan and hire Matt
| Stoller?
| alephnerd wrote:
| That article is one of the several engagements he's been
| putting on recently in the right-sphere.
|
| His most damning quote was from 2023 that "fundamentally,
| my view is that authoritarianism is coming from the private
| sector," not from those who'd attempt to seize control of
| democratic institutions by force. [0]
|
| > Trump will "most likely" fire Lina Khan and hire Matt
| Stoller
|
| He doesn't need to fire Lina Khan (though he most likely
| would) because Melissa Holyoak's term is expiring in 2025
|
| [0] -
| https://www.politico.com/news/magazine/2023/04/21/matt-
| stoll...
| downWidOutaFite wrote:
| You don't think that's a pretty good proxy for units?
| Especially leading edge parts.
| rowanG077 wrote:
| It really isn't. Apple pays insanely well to exclusively use
| TSMC top tier node. I would not be surprised if the SoC in an
| iphone costs Apple 10 times as much as the average android
| phone SoC.
| gruez wrote:
| But the 85% figure is almost certainly profit, not revenue.
| In that case using that as a proxy for units sold is so
| absurd that it's bordering on bad faith argumentation.
| asdasdsddd wrote:
| So because Apple makes higher profit, they purchase a higher
| proportion of the highest quality parts. And the fact that
| they choose to purchase from Asia is bad because we want
| domestic production? I guess I can buy it, but I feel like
| this is more of a failure of American fabs more than
| anything.
| SuperscalarMeme wrote:
| This is a pretty disappointing article with some very
| questionable examples.
|
| The Imagination Technology example in particular is poor since
| they were a supplier of intellectual property, not physical
| goods. So Apple's usage of them as a supplier had limited bearing
| on the firm's other customers or lack thereof. Similarly, the ban
| of Apple Watches over IP theft has nothing to do with the supply
| chain issues that the authors attempted to outline.
|
| The thesis is also all over the place. The title indicates the
| problem is semiconductors, but then lots of the arguments have to
| do with suppliers outside of semiconductors. If Apple's reliance
| on TSMC is the big problem, then why isn't even mentioned that
| TSMC is the only competitive fab on cutting edge nodes?
|
| Lastly, the overarching theme is severely misguided. All of these
| supply chain dealings are as old as semiconductors themselves.
| When the industry moved towards targeting consumer electronics in
| the 70s, semiconductor manufacturing moved out of the US long
| before Apple was relevant. And if Apple weren't a powerhouse of
| consumer electronics today, other companies would be doing the
| same things. It's just part of the nature of trying to
| manufacture and sell mass market electronics.
| pcdoodle wrote:
| Fun thing is, most of these semis end up in the trash because
| apple puts roadblocks on reuse!
| malkosta wrote:
| The idea that introducing more regulations will foster the U.S.
| semiconductor industry doesn't make sense. History shows that
| heavy regulation often stifles competition and innovation,
| leading to stagnation--similar to what happened in Russia's
| outdated industries. Instead of imposing more rules that could
| entrench dominant players, the focus should be on creating an
| environment that encourages competition and innovation.
| Overregulation risks making the U.S. chip industry less
| competitive globally, which would undermine efforts to revitalize
| it.
| duxup wrote:
| >the focus should be on creating an environment that encourages
| competition and innovation.
|
| What would that be exactly? Seems like an easy thing to say
| without specifics, but things like environmental rules and
| minimum wage laws exist for reasons. If those are obstacles,
| I'm not sure they're worth discarding.
| downWidOutaFite wrote:
| Why bring up Russia when we have the Chinese example? History
| shows that China has captured huge industries by using heavy-
| handed government regulation
| necovek wrote:
| > Instead of imposing more rules that could entrench dominant
| players, the focus should be on creating an environment that
| encourages competition and innovation.
|
| How do you "create an environment" without "imposing more
| rules"? If you don't really do anything, status quo remains. I
| guess you could be referring to rules that need to be
| abolished, so I wonder which ones are really stopping
| competitors to Apple from springing up that we should do away
| with?
| htk wrote:
| Terrible article, as expected from Matt Stoller.
|
| "With this position, Apple uses its outsized buying power to
| squeeze the margins of its suppliers such as Foxconn, leading to
| poor pay and terrible working conditions in Chinese factories."
|
| So Foxconn is either choosing to not do business with Apple's
| competitors who would pay more (??), or the competitors can't
| place orders of the magnitude that Apple can and Foxconn
| workforce would just be smaller with a lot less people being
| employed.
|
| The intellectual dishonesty in the argumentation is so bad that
| I'm pretty sure I'll skip future Matt Stoller articles.
| necovek wrote:
| The article is certainly somewhat incoherent.
|
| But there's a hint of dishonesty in your retort too: obviously,
| there are competitors who would pay more (and they are paying
| more elsewhere, since their margins are so much smaller than
| Apple's), but for much smaller quantities of production. A
| supplier like Foxconn can't afford to lose a customer like
| Apple because they were already selling their services cheap
| with low margins. Apple is basically squeezing them ever more
| -- instead of growing business needs leading to improved
| conditions for employees, Foxconn is forced to provide more for
| less because Apple can demand that "or else".
|
| I am not saying this is true, but this line of thinking is
| still obvious just from the short quote you posted.
| hx833001 wrote:
| Intel should have produced ARM chips for Apple as a foundry. If
| they're to be wildly successful again, they will be doing this
| anyway. They gave up 18+ years out of x86 pride and bad
| leadership. I hope Gelsinger can beat TSMC at the process
| technology game and win Apple's business.
| kergonath wrote:
| I think we'd be better served with 3 or 4 companies with close-
| enough-to-cutting-edge fabs than just Intel. The times when
| Intel was the undisputed king were not that good in the long
| run. We need alternatives.
| SllX wrote:
| > and more action needs to be taken by the federal government to
| rein in its control over the global electronics supply chain.
|
| Yeah so here it is. The moment you start talking command and
| control economies you need to GTFO the room.
| ankit219 wrote:
| A weird article.
|
| Apple was not the first or the only company to look to East Asia
| for cheap manufacturing, elctronic equipments, chips, or cheap
| labor. The trend was started and accelerated by motor companies
| and hardware just followed suit.
|
| Then, some other points are just...there. Apple is America's
| semiconductor problem because Apple is so big it purchases things
| in bulk and gets discounts - like every other big company in
| every industry.
|
| TSMC sold 100% of the capacity to Apple for 3nm chips because no
| one else had the designs ready, Apple needed them in bulk, and
| the yield wasn't that high. It is problematic, but you need to
| mention these things when making a claim.
|
| The problem is two fold - other companies are not really
| innovating and experimenting at semis with a scale at which Apple
| is. This is a market failure more than an Apple failure. Others
| were reliant on Qualcomm, broadcomm, samsung, and Intel, with
| slower pace of innovation. Then there is Asian countries with
| cheap economies of scale.
|
| It's one thing to assume the most nefarious intent from the start
| and then look at everything from that lens. It mostly leads to
| paranoia, not insight.
| fundad wrote:
| A few other things jumped out to me: - Automotive's advanced
| features require chips but not the most advanced chips (by
| design, for reliability). - Micron's HQ is in the US but has
| operated globally since 1998 including design. ("Micron really
| went global in terms of its operations once it acquired the TI
| DRAM operations in 1998") - TSMC's 90% share of global semi is
| why Apple can get the exclusive on advanced processes. - Isn't
| a lot of CHIPs Act money help prop up Intel who didn't succeed
| in mobile and is laying off thousands anyway? - Apple did not
| cause poor pay and working conditions in China, the conditions,
| pay and environmental protections are how China attracts
| businesses. - Apple can not tax you because they can not arrest
| you if you don't pay 30% commission. - Massimo is medical
| device company, I'm curious how big a semi concern they are.
| alephnerd wrote:
| > Automotive's advanced features require chips but not the
| most advanced chips
|
| Exactly, and if Matt Stoller was honest he would bring up
| that point.
|
| Most automotive chips use 28nm, 40nm, and 60nm nodes and
| China has been very competitive in this space now because of
| existing capacity built from OSAT and AMTP consolidation in
| China by Taiwanese and Malaysian/Sigaporean players like UMC
| before the 2019 HK protests and HiTek from the 2000s-2010s.
|
| It's analog chips, 28nm/40nm nodes and Packaging that have
| been getting a significant amount of CHIPS funding, as well
| as similar funding from the Japanese, Taiwanese, South
| Korean, Malaysian, and Indian governments recently.
|
| From a NatSec perspective, it's those kinds of nodes that
| have a critical impact as most weapons systems can subsist on
| a Intel i7 and Nvidia Maxwell comparable CPU and GPU.
|
| Think EWS, C-RAMs, Guidance Systems, etc.
|
| > Isn't a lot of CHIPs Act money help prop up Intel who
| didn't succeed in mobile and is laying off thousands anyway
|
| Those layoffs are staff who don't have experience with High
| NA EUV processes (aka staff who didn't skill up). I can
| safely say that.
|
| The CHIPS funding is a mix of subsidizing High NA EUV nodes
| as well as domestic OSAT and AMTP/Packaging capacity.
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