Apple To Buy all 3nm Chips Produced By TSMC in One Year

The group from Cupertino, California is perhaps the most lucrative customer you can win in the chip industry, so it’s not surprising that everyone would like to have Apple as a customer. TSMC can now say that – but that has its “price”.

3nm chips exclusively for Apple for one year

It’s been an open secret for months that Apple has chosen Taiwan Semiconductor Manufacturing Company (TSMC) to supply its next-generation chips. These rely on the 3nm process and are to be used in the M3 series for Macs and the A17 Bionic chipsets for the next iPhones.

So this is anything but new or a secret, but The Information has been able to find out various details about the rumored deal between Apple and TSMC. Accordingly, the Californian group was able to secure extremely advantageous conditions with this deal. In other words, TSMC had to make concessions to get the job.

The whole thing can best be summarized as follows: TMSC gets a deal with enormous quantities, at the same time the semiconductor manufacturer has agreed to “swallow” all production losses itself.

That’s not exactly standard in the industry, because the chip designers usually pay for each die produced (i.e. each “base chip”) – regardless of whether they work or not. Such production failures or defects are anything but unusual, especially at the beginning. According to The Information, only about 70 percent of the 3nm dies at TMSC were initially usable.

In the case of Apple and TSMC, however, the quantities that the Californians need are so large (and lucrative) that the foundry does not have to, or perhaps cannot, charge Apple for the defective chips. Apple is by far the most important customer for the Taiwanese company – in 2022 Apple was responsible for almost a quarter of the total turnover of 72 billion dollars.

The Information also reports that Apple has secured all of TSMC’s 3nm manufacturing capability. This means that no other company will receive such chips from TMSC for “about” a year – only then will there be the capacity to also supply other companies.