Apple wants all of TSMC's 2nm chips, so they sent Jeff Williams in secret

AppleInsider

Apple is preparing to start the production of chips using a 2-nanometer process, and sent COO Jeff Williams to Taiwan with a view to securing the first batch.

Processor wafers [TSMC]

Apple has been proactive in pushing its chips to use the latest and smallest scale manufacturing processes, with its latest chips using a 3-nanometer foundry process. Now, it is poised to shift to 2nm.

Apple Chief Operating Officer Jeff Williams went on a secret visit to Taiwan, sources of UDN claim. The trip involved a visit to chip partner TSMC, with TSMC president Wei Zhejia in attendance to receive the COO.

The trip was reportedly to discuss 2nm production, as well as the development of more AI-forward chips, with TSMC set to produce them.

TSMC does not comment on market rumors nor about individual clients, like Apple.

The potential rewards for Apple placing the first order of 2nm chips could be massive for TSMC. Apple's payment to TSMC for the first 2nm batch could be the equivalent of TSMC's annual revenue, the report claims, and it could reach a new revenue high of NT$600 billion ($17.3 billion).

Previous rumors have said Apple has been designing 2nm processors, with the aim of producing the chips via its long-time chip partner. As for when Apple's products will use 2nm chips, consumers may have to wait until the iPhone 17 Pro in late 2025.



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beowulfschmidt

No doubt someone will claim that Apple has an unfair advantage, and buying all of the first batch is simply a tactic to suppress other potential buyers.

tmay

I very much doubt that Apple would be inclined to purchase 2nm SOC's for the equivalent of a "year's worth of revenue" at $173 B, given that Apple is typically about 25% of TSMC revenue (something on the order of $18 B in 2023). 

Still, what would Apple want to do with all of those additional transistors that they are "allegedly"  purchasing? 

macxpress

beowulfschmidt said:

No doubt someone will claim that Apple has an unfair advantage, and buying all of the first batch is simply a tactic to suppress other potential buyers.

Apple also used to purchase all of the NAND Flash chips for its iPods, iPhones and certain Macs back in the day too....because it had the money to do so and it wanted to make sure the supply of NAND Flash wasn't the limiting factor in getting their products out the door. 

tmay said:

I very much doubt that Apple would be inclined to purchase 2nm SOC's for the equivalent of a "year's worth of revenue" at $173 B, given that Apple is typically about 25% of TSMC revenue (something on the order of $18 B in 2023). 

Still, what would Apple want to do with all of those additional transistors that they are "allegedly"  purchasing? 

My guess would be iPhones and some type of updated Mac....and obviously more M4 iPads. 

MacPro

Not to mention dibs on all 1 nm, 0.5, and 0.1 nm.  

MacPro

beowulfschmidt said:

No doubt someone will claim that Apple has an unfair advantage, and buying all of the first batch is simply a tactic to suppress other potential buyers.

Yes, it's obviously a thinopoly.

danox

Apple has the money and more importantly has their designs ready to go now why shouldn't Apple buy as many slots as they can? Note: Intel in recent times reserved a lot of time and had to cancel because they didn't have their sh_t together as usual. (also note: with Intel's history they probably were actually playing games with their competition).

Intel cancels N3 orders; TSMC pares back N3 expansion - Electronics Weekly
TSMC 3nm Chip Delay Might Happen as Intel Cancels Order!

netrox

I am sure Intel has something up to offer to competitors..... good luck. 

13485

We have all become blasé about nanometers. It pays to remember that a sheet of paper is 100,000 nm thick. and a strand of human DNA is about 2.5 nm. A nanometer is invisible to the naked eye.

I suppose we're all waiting for picometer chips.

spheric

danox said:

Apple has the money and more importantly has their designs ready to go now why shouldn't Apple buy as many slots as they can? Note: Intel in recent times reserved a lot of time and had to cancel because they didn't have their sh_t together as usual. (also note: with Intel's history they probably were actually playing games with their competition).

Intel cancels N3 orders; TSMC pares back N3 expansion - Electronics Weekly
TSMC 3nm Chip Delay Might Happen as Intel Cancels Order!

That's been well-documented. That is the N3B process that TSMC used in the M3. It was intended as a stop-gap with some life in it while they got the long-term N3E line going that simplified and optimised things for 3nm production. 

Unfortunately, while it was somewhat intended to be a dead end, it also turned out to be much more complex and expensive than anticipated, so yield was much lower and power savings vs. horsepower were less than expected. Apple is literally the only customer for the process. 

Which is why the M3 Ultra never materialised (though this was probably decided before any M3 Macs shipped) and the iPad skipped the generation entirely and went straight to M4, which is on N3E. 

N3E will also be directly adaptable to follow-up generations, while N3B —> N3E needs a complete reëngineering for the new tech and tooling.

https://www.anandtech.com/show/21394/tsmc-performanceoptimized-3nm-process-technology-on-track-for-mass-production-this-year 

badmonk

This is completely believable, Apple has the funds and between the iPhonePros, iPadPros and MacBooks they should be able to soak up TSMC’s bleeding edge (after all these are the most popular products on the planet).  Articles about TSMC consistently state that Apple takes the bleeding edge and Nvidia follows close behind because they both have the pockets and the need.

Remember yields will not be great at first.  

eriamjh

3nm chips aren't even 3nm.  It's getting into the BS range like a 65" TV isn't 65".

libertyandfree

macxpress said:

beowulfschmidt said:

No doubt someone will claim that Apple has an unfair advantage, and buying all of the first batch is simply a tactic to suppress other potential buyers.

Apple also used to purchase all of the NAND Flash chips for its iPods, iPhones and certain Macs back in the day too....because it had the money to do so and it wanted to make sure the supply of NAND Flash wasn't the limiting factor in getting their products out the door. 

tmay said:

I very much doubt that Apple would be inclined to purchase 2nm SOC's for the equivalent of a "year's worth of revenue" at $173 B, given that Apple is typically about 25% of TSMC revenue (something on the order of $18 B in 2023). 

Still, what would Apple want to do with all of those additional transistors that they are "allegedly"  purchasing? 

My guess would be iPhones and some type of updated Mac....and obviously more M4 iPads. 

Now this is absurd since no way is Apple securing $100B+ from TMSC Apple doesn’t spend anywhere close to that on semiconductors over a few years.  Let’s do some simple math; iPhone processors are about $30 each and for 200M iPhones that’s only $6B per year and lets assume Apple sells 25M Mac’s and those CPUs say cost $200 each that’s another $5B  and  Apple sells about 50M iPads and assume avg processor cost of $60  that adds another $3B.  So we are at about $14B per year even if I’m off by a factor of 2 it’s no where near $170B even over a few years.  

blastdoor

I’m guessing all trips made by apple execs to negotiate with suppliers are “secret.”

blastdoor

tmay said:

I very much doubt that Apple would be inclined to purchase 2nm SOC's for the equivalent of a "year's worth of revenue" at $173 B, given that Apple is typically about 25% of TSMC revenue (something on the order of $18 B in 2023). 

Still, what would Apple want to do with all of those additional transistors that they are "allegedly"  purchasing? 

That’s an interesting question. I hope someone can improve my answer because I’m making wild guesses. 

I’ll guess that apple wants to fill 10 data centers with 2 million M# Ultra chips per data center, so 20 million M# Ultras. An ultra uses about 9 times as many transistors as an A chip of the same generation, so that would be the equivalent of 180 million iPhones (a little less than a year production).

presumably the cost per transistor of an ultra is higher than for an A chip because yields are lower for bigger chips. 

So… maybe that’s part of the story? Still, though, I’m not sure that’s enough to explain it, and I’m telling a pretty radical story 

timmillea

It makes perfect sense to me. Apple is the company that taught Intel that performance per Watt was more important than performance. If Apple can obtain one year's plus supply exclusively of the 2nM chips, they can go places that no competitor can follow. Of course it won't be an 'exclusive contract', that would fall foul of the regulators, but if Apple orders more than can possibly be produced, it is tantamount to the same thing. 

blastdoor

timmillea said:

It makes perfect sense to me. Apple is the company that taught Intel that performance per Watt was more important than performance. If Apple can obtain one year's plus supply exclusively of the 2nM chips, they can go places that no competitor can follow. Of course it won't be an 'exclusive contract', that would fall foul of the regulators, but if Apple orders more than can possibly be produced, it is tantamount to the same thing. 

If Apple “corners the market” on 2nm they would need to have the kind of big radical plans I laid out in my previous post. That would be entertaining to watch play out.

spheric

libertyandfree said:

macxpress said:

beowulfschmidt said:

No doubt someone will claim that Apple has an unfair advantage, and buying all of the first batch is simply a tactic to suppress other potential buyers.

Apple also used to purchase all of the NAND Flash chips for its iPods, iPhones and certain Macs back in the day too....because it had the money to do so and it wanted to make sure the supply of NAND Flash wasn't the limiting factor in getting their products out the door. 

tmay said:

I very much doubt that Apple would be inclined to purchase 2nm SOC's for the equivalent of a "year's worth of revenue" at $173 B, given that Apple is typically about 25% of TSMC revenue (something on the order of $18 B in 2023). 

Still, what would Apple want to do with all of those additional transistors that they are "allegedly"  purchasing? 

My guess would be iPhones and some type of updated Mac....and obviously more M4 iPads. 

Now this is absurd since no way is Apple securing $100B+ from TMSC Apple doesn’t spend anywhere close to that on semiconductors over a few years.  Let’s do some simple math; iPhone processors are about $30 each and for 200M iPhones that’s only $6B per year and lets assume Apple sells 25M Mac’s and those CPUs say cost $200 each that’s another $5B  and  Apple sells about 50M iPads and assume avg processor cost of $60  that adds another $3B.  So we are at about $14B per year even if I’m off by a factor of 2 it’s no where near $170B even over a few years.  

You're apparently in the right order of magnitude, here. 

in 2022, Apple was reportedly responsible for 23% of TSMC's $72 billion revenue, which is about $16.6 billion. They've locked up the entire production of N3B 3nm process, as everybody else will be switching directly to N3E. 

9secondkox2

2nm sounds just right for an M5 Ultra 32" iMac 

9secondkox2

All of the chips? Or all of the initial chips? If all of them... dang. Say goodbye to all the competitors. Apple owns the market. About time.

Now watch the various governmental powers try to find a "problem" with the business deal. "Oh no. Apple is being successful again. Time to break out the baseball bat. Now where is that healthy kneecap..."

With the 3nm M4 single core score being so great, that translates into the multicore scores as well. Add a ton more transistors and... wow.

tmay

blastdoor said:

tmay said:

I very much doubt that Apple would be inclined to purchase 2nm SOC's for the equivalent of a "year's worth of revenue" at $173 B, given that Apple is typically about 25% of TSMC revenue (something on the order of $18 B in 2023). 

Still, what would Apple want to do with all of those additional transistors that they are "allegedly"  purchasing? 

That’s an interesting question. I hope someone can improve my answer because I’m making wild guesses. 

I’ll guess that apple wants to fill 10 data centers with 2 million M# Ultra chips per data center, so 20 million M# Ultras. An ultra uses about 9 times as many transistors as an A chip of the same generation, so that would be the equivalent of 180 million iPhones (a little less than a year production).

presumably the cost per transistor of an ultra is higher than for an A chip because yields are lower for bigger chips. 

So… maybe that’s part of the story? Still, though, I’m not sure that’s enough to explain it, and I’m telling a pretty radical story 

Apple could certainly load up a few data centers, and I'd be remiss if I didn't note all of the opportunities for Vision Pro that would encourage that, from streaming to cloud assisted content ediitng and creation.

Gaming might be another driver, though given Apple's history, I wouldn't expect such.

I postulated years ago in an AI post that Apple could enter the massively multiplayer game market, and stream Metal code in lieu of finished frames, so that edge processing is still a driver for hardware. It's an interesting concept, and gains importance as the last of the Intel processors drop off. I doubt we will ever see such a thing.

I just don't see that Apple is buying that asserted level of production that the article claims.