Similar to issues Austrian AMS-Osram has in Malaysia, having to write off its micro LED operations by between €600 million and €900 million, due to Apple pulling out as the main customer for the new fab.
Unfortunately when Apple come knocking they either demand exclusivity, or they order so much product that you cant even supply to other people if you wanted to.
Looks like you have to resist both variants... or, alternatively, timebox Apple so that you can come back to other customers, maybe periodically. Or, even better - include the costs for the potential problems in your consideration.
I guess that most likely means not winning the bid with Apple. But these companies aren't exactly aged grandmothers who have walked all the way to the one pharmacy in town; I don't think this constitutes an abusive business relationship.
Sounds like Apple is part of a US master plan to have lots of mothballed chip fab capacity distributed all around the West (or at least, not in China).
Yes it is, but small-ish semi companies don't have much choice. Semi companies will walk through fire to get Apple (or Samsung) as a customer due to their volumes, which long term turns out to be a form of Dutch Disease[1]. They'll give in to all of Apple's crazy demands just to get the contract signed, giving Apple a disproportional amount of leverage.
Having Apple as your customer in this business, is generally a very unpleasant experience for most parties involved, except for the shareholders and managers who pocket the bonuses from the deal they help close, while the engineers are stuck with the unpaid overtime and the redundancies that follow once Apple gives the specs of your product to a competitor in Asia to build for cheaper while you do the R&D.
Sure. Apple was famously feeding Intel Qualcomm's datasheets, so Intel could build them a LTE modem that would rival Qualcomm giving Apple some leverage in price negotiations over Qualcom. Of course Intel couldn't deliver, and Apple bought them to insource modem development inhouse until they could.
And secondly, I live in a semi hub with both large and small semi players in my area along with a big network of workers where everyone kind of knows everyone else due to crosspollination over the years, and the stories of dealing with Apple all match and have also been documented online by others:
1) Apple contracts you to make them a certain chip since currently you're the only company with that kind of product on the market.
2) Apple asks as part of the contract you send them all the datasheets and low level info.
3) In parallel, they either develop the part in-house if it's high margin like a SoC or modem, or if it's low margin, feed all your documentation to other semi companies asking them to bid each other to the bottom, making that part for much less than you.
4) After a couple of years in business, Apple now has their part much cheaper from another supplier and your services are no longer required.
5) Rinse and repeat for every part in the phone/laptop/etc. Courtesy of Tim Cook, the supply chain mastermind.
They also have the habit of sending you on wild goose chases to develop new custom parts for them without any commitment, and then pulling out last minute after you've already spent time and R&D money.
> I would imagine Apple would respect IP since they are so defensive of their own.
You imagine wrong. Apple only cares about their own IP, but have proven they don't care about YOUR IP, if your lawyers are less expensive then theirs.
Proof: all the HN stories on Apple ripping off the likes of Massimo as well as small individual app developers like the Apple Watch keyboard dev, then shutting them down, as well as the famous click-wheel for their iPods they ripped off from Bang and Olufsen.
I was more interested by the inline graphic showing declining US semiconductor production by 2030. Is that really the case? What are all of the subsidies going toward?
The graph doesn't differentiate nodes so I wouldn't draw a specific conclusion from it. The tens of billions of subsidies in the CHIPS act may seem like a lot but the semiconductor business can be brutally expensive.
The graph is percentage of total production. You can see Chinese production ramps up significantly, which can presumably imply that US production as a percentage of total world production falls off, even if absolute production increases.
How? Apple is the only one making orders in the hundreds of millions USD at once to justify developing new products and opening up new production lines. Ask TSMC. Without Apple throwing money at them, they wouldn't have advanced their processes so far ahead of Samsung and Intel.
It's easy to comment off the armchair "just get more customer d'uh!", when people don't understand what they're talking about.
People who mainly make money working in the SW industry seem to have a tough time understanding how the semi industry works and assume it must work just like in SW, but it doesn't, not by a long shot.
I never said it was easy, that's your projection and prejudice.
Diversification is an essential business principle. In this industry, it requires enterprise hustling to engage other customers with a professional sales pipeline over multiple years.
Yeah. Workers in the Eastern European communist countries were anything but empowered. Unless you count being held at gunpoint and constantly spied on by the secret police, empowerment.
In any case, the empowered ones will always be those with the guns, hence the army/milita apparatus was in charge, not the workers who were enslaved as before except now by the new management masquerading as communist instead of the old hereditary nobility who got shot/expelled in the power transfer.
Workers can never be empowered over the means of production or anything actually, till they first seize the monopoly on violence away from the military which is kinda impossible.
I admit that it’s a glib and naive suggestion. But also, no, I’m foggy as to why it’s “worse”.
The upside I see is that rank & file soldiers and support staff could meanjngfully oppose engagements they didn’t believe in, which currently can’t happen. I saw this as a step towards breaking the state monopoly on violence.
Oh, you just pushed the assumption that that specific military exists in a strong democracy with institutions that are stronger than force into your reasoning. (I wonder if there exist any democracy that strong.)
Anyway, the OP was talking about the old communist dictatorships on the Easter Europe. The military forces on those were not composed of people that had it clear on their mind that they worked to protect the little people. Instead, those people were power itself. Creating a government-challenging forum with the people that personify power is a very strong step into eternalizing their tyranny.
I see where you're going. Thanks, that was helpful.
I think that in my earlier, admittedly glib comments, I had assumed these things:
- strong democracy (as you suggested)
- there have been plenty of instances of the nation's army taking control, regardless of democracy or unionisation (e.g. Myanmar)
Given the second point, I don't see how unionising makes any difference to the likelihood of a military takeover. But your main point is powerful enough to make me want to think on this all some more.
