However the bit that caught my attention was when you mentioned that because Apple doesn’t sell to the open market and only buys for themselves, that this puts Apple at an advantage paradoxically.
Do you mind walking me through your thought process on this one as to why you think this puts Apple at an advantage, I’d like to understand a little more?
I’d have thought that having higher volume orders in general (even for mixed node orders) would give Apples competitors a cost advantage as they would have economies of scale on their side relative to the low volume orders of say Apple etc…
Thanks for initiating this conversation, it's an interesting one!
My argument is very simple: if making high-performance chips is going to become more expensive in the future, Apple is in advantage because they cut out the middleman. They can easily afford spending hundreds of $$$ per chip on design and manufacture, whereas Intel and AMD need to sell chips with profits. Another factor is that Apple devices are expensive, and users buy them. Nobody bats an eye anymore at a $3000-4000 MacBook Pro. A Dell XPS at that price level won't sell. Not to mention that the nature of the business is very different. Most of the chips Intel sells are low-performance, budged CPUs. Most of the chips Intel makes money with are high-end, enthusiast or server CPUs which are sold at tremendous margin. This is a difficult business model to balance, and this is why Intel uses binning so aggressively, selling the same CPU dies at very different price points. That is very unlike Apple, which value performance consistency across their CPUs.
Regarding volumes, I think you might be underestimating how much chips Apple actually produces. Intel has reportedly shipped around 50 million CPUs in 2023. Nvidia and AMD have shipped around 70 million GPUs to the customers. But Apple has shipped over 200 million (!!!) in iPhones alone. It is no surprise that they routinely book entire production capacity of TSMC. So I see no financial disadvantage on the count of low volume orders. If anything, they have to apply very careful production management to make sure there is enough production to satisfy their needs (which is likely the main reason why we only see M4 on the iPad now).
And finally, new developments in SoC packaging can enable performance improvements that Apple with their deep pockets can easily access, and which might be less economically viable for other companies. For example, Apple currently has a disadvantage in GPU performance, since faster GPUs require larger dies. Nvidia can afford making a huge die filled with GPU compute logic. But Apple also needs to fit the CPU, I/O and other IP blocks. As die size approaches reticle limit and costs increase, this imposes a hard boundary of what Apple can do. However, if they split the IP blocks into multiple dies and stack them together on a single package, they can break past that limit. I have little doubt that Apple will be the first one to build a high-performance 3D stacked SoC. They have been working on that technology for years, their patents in that field are the most advanced, and they closely work with TSMC to make this happen. I think we will see chips like these in a few years.
