Apple’s previously dominant status as a TSMC client is encountering new hurdles as the AI surge amplifies GPU demand from firms like NVIDIA and AMD, according to a recent report.
### Fresh report examines the evolving partnership between Apple and TSMC
Tim Culpan reports at Culpium:
When CC Wei visited Cupertino last August, he brought disappointing news for his largest customer. TSMC’s CEO informed Apple’s executives that they would need to accept the biggest price increase in years.
Tim Cook and his team absorbed the news without complaint. Wei had been signaling price increases during earnings calls throughout the past few quarters, and the rising gross margins of the Taiwanese chip manufacturer reflected its growing pricing leverage.
However, this wasn’t the most alarming information, according to my sources.
Apple, which previously maintained a strong presence on TSMC’s customer roster, now finds itself competing for manufacturing capacity. With the ongoing AI boom, and each GPU from clients like Nvidia and AMD occupying a larger space per wafer, the iPhone manufacturer’s chip designs no longer hold guaranteed placement at TSMC’s nearly two dozen fabs.
What Wei likely did not disclose to Cook is that Apple might no longer be his largest customer.
Apple and TSMC have enjoyed a long, mutually beneficial collaboration. Yet, it’s not surprising that the rise of AI is significantly affecting their changing dynamics.
We’ve heard previous reports that hinted at impending changes.
Last fall, there was a China Times report suggesting that the upcoming A20 chip for the iPhone would be considerably more costly for Apple due to TSMC’s price increases.
Additionally, multiple reports have surfaced regarding Apple and Intel renegotiating a partnership to manufacture both Mac and iPhone-class chips. While it’s unlikely that Apple will completely part ways with TSMC, the rumors suggest that Apple now requires a more diversified supply chain than it did previously.
What effects will these adjustments have on consumers? It’s uncertain. However, if the iPhone 18 series turns out to be pricier than its predecessors, we may have a clearer understanding of the reasons.
What are your insights from this report on the relationship between Apple and TSMC? Share your thoughts in the comments.