In a groundbreaking move, Apple has recently secured a one-year exclusive deal with Taiwan Semiconductor (TSMC) for the use of its highly sought-after 3nm process technology. This agreement is set to significantly boost the production of Apple’s upcoming M3-series Macs, slated to launch in October, as well as the highly anticipated iPhone 15, which will feature the advanced A17 Bionics chip. According to reports, Apple’s colossal chip order is valued at billions of dollars and is of such magnitude that it will consume TSMC’s entire capacity for 3nm manufacturing, leaving no room for orders from rival companies.
A Strategic Move by Apple
Given TSMC’s previous struggles to meet the demand for 3nm wafers, it comes as no surprise that Apple has taken this bold step. By securing this exclusive agreement, Apple not only ensures a steady supply of chips for its own products, but it also gains a significant advantage over its competitors. What sets this deal apart from industry norms is the fact that Apple will only be charged for functional chips, unlike the traditional practice where companies pay for every chip produced, regardless of its functionality. This could potentially save Apple billions of dollars, as any defective chips will be the responsibility of TSMC to absorb the cost.
Implications for TSMC and the Industry
The impact of this exclusive agreement extends beyond Apple and TSMC. The announcement reveals that Apple’s orders accounted for a staggering 23% of TSMC’s $72 billion revenue in 2023, firmly establishing Apple as the semiconductor manufacturer’s largest customer. For other major players in the industry, such as Nvidia, AMD, Qualcomm, and even Intel, this means they will need to seek alternative sources for their 3nm chip requirements during this exclusivity period.
While TSMC has been the leading supplier for Apple’s chip needs for nearly a decade, Samsung has recently made significant strides in achieving respectable yields with its own 3nm processes. This competition from Samsung could provide TSMC with the push it needs to further enhance its 3nm capabilities. Additionally, Intel’s notable investments in building its own chip fabrication facilities worldwide indicate its determination to compete in the 3nm chip space.
Apple’s exclusive deal with TSMC for 3nm chips marks a significant milestone in the semiconductor industry. With billions of dollars at stake, Apple secures its chip supply, gains a valuable cost-saving advantage, and solidifies its position as TSMC’s largest customer. The move also forces other prominent tech giants to seek alternative sources for their 3nm chip requirements, sparking potential competition and innovation in the industry. As Apple continues to push the boundaries of technology with its upcoming product releases, this exclusive agreement with TSMC sets the stage for a dynamic and highly anticipated year ahead.
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