Apple was not the first or the only company to look to East Asia for cheap manufacturing, elctronic equipments, chips, or cheap labor. The trend was started and accelerated by motor companies and hardware just followed suit.
Then, some other points are just...there. Apple is America's semiconductor problem because Apple is so big it purchases things in bulk and gets discounts - like every other big company in every industry.
TSMC sold 100% of the capacity to Apple for 3nm chips because no one else had the designs ready, Apple needed them in bulk, and the yield wasn't that high. It is problematic, but you need to mention these things when making a claim.
The problem is two fold - other companies are not really innovating and experimenting at semis with a scale at which Apple is. This is a market failure more than an Apple failure. Others were reliant on Qualcomm, broadcomm, samsung, and Intel, with slower pace of innovation. Then there is Asian countries with cheap economies of scale.
It's one thing to assume the most nefarious intent from the start and then look at everything from that lens. It mostly leads to paranoia, not insight.
It isn't Apple who is the problem here, it is Intel who refused to manufacture ARM chips for Apple. So Apple didn't have much choice as there aren't much fabs around to choose from. Now Intel, sore looser, is competing for CHIPS money against TSMC/Apple (and Intel will definitely get and waste a lot of those CHIPS money thus making the problem even worse). The article, which looks like a hit-piece, is written by a think-tank funded by Omidyar who is pushing for CHIPS and seems to be connected with Intel a bit here and a bit there. Did somebody say "submarine"?
Notable also is the omission of Nvida - which I also believe mostly uses TSMC.
That’s a marketing tactic that even works on HN I’m afraid. Create an enemy and then tell a story about that nemesis.
Our human storytelling brains need to hear tales of good and evil.
If you want to get an article like that ranking that’s one way to do it. Unfortunately.
Exactly, and if Matt Stoller was honest he would bring up that point.
Most automotive chips use 28nm, 40nm, and 60nm nodes and China has been very competitive in this space now because of existing capacity built from OSAT and AMTP consolidation in China by Taiwanese and Malaysian/Singaporean players like UMC before the 2019 HK protests, MediaTek, and ASMPT from the 2000s-2010s.
It's analog chips, 28nm/40nm nodes and Packaging that have been getting a significant amount of CHIPS funding, as well as similar funding from the Japanese, Taiwanese, South Korean, Malaysian, and Indian governments recently.
From a NatSec perspective, it's those kinds of nodes that have a critical impact as most weapons systems can subsist on a Intel i7 and Nvidia Maxwell comparable CPU and GPU.
Think EWS, C-RAMs, Guidance Systems, etc.
> Isn't a lot of CHIPs Act money help prop up Intel who didn't succeed in mobile and is laying off thousands anyway
Those layoffs are staff who don't have experience with High NA EUV processes (aka staff who didn't skill up). I can safely say that.
The CHIPS funding is a mix of subsidizing High NA EUV nodes as well as domestic OSAT and AMTP/Packaging capacity.
Arguably it's a Microsoft failure more than anything.
If they had delivered a version of Windows for ARM capable of seamlessly emulating x86 code with no compromises and released it a decade ago the world would likely be different.
This is hardly possible on most ARM chips because x86 has a much stronger memory model than ARM. Also concerning "with no compromises": common x86 implementations have a very fast implementation of the SIMD instruction sets (SSE..., AVX/AVX2, perhaps AVX-512) that is much slower to emulate on ARM because their SIMD instruction set is different. The only reason why people don't realize this is that a lot of common software makes no intense use of these SIMD instructions. Then there are the subtle parts that (as far as I am aware) the ARM FPU handles multiplication of denormalized floating-point numbers slightly different than x86 (both implementations are allowed by the standard) etc.
Even now ARM is niche.
If intel/amd/etc can't build their own fabs, and expect we-the-people to pay for it, then we-the-people should jump to socialism and nationalise the lot.
If we have to pay for it, we should own it...
The intent is pretty clear and uncontroversial: profit by all means, like any other for-profit entity. Real problems arise when the company becomes (nearly-)monopolistic and their actions start to harm whole industries, like in this case. In other news, monopolies are bad for you.
Do you have a source for this?
Right now there are three. Intel, Apple, and AMD. In 2022, there was one.
Samsung manufactured for Qualcomm who were in testing phase.
I feel like I'm getting trolled by the author who is citing sales and profits instead of units produced as a metric.
Because it's Matt Stoller.
I've commented (with citations) enough on HN about Stoller's biases and issues around analysis [0][1]
He's upped his content publishing the past few months now that he is competing with Oren Cass to change mindshare and build a prominent profile, but Cass is a Romney protege so he's limited.
If Trump becomes president, Stoller is most likely going to be nominated as an FTC commissioner because of his close relationship to JD Vance [2]
[0] - https://news.ycombinator.com/item?id=40624532
[1] - https://news.ycombinator.com/item?id=38147499
[2] - https://nationalpost.com/opinion/matt-stoller-whos-afraid-of...
Moreover, give iPhones are significantly more expensive than comparable Android phones, Apple’s ability to claw market share back from Android phones over the last decade is the opposite of how a monopolist might operate by flooding a market with cheap alternatives. It speaks to a consumer perception that iPhones have a larger value.
[1] https://gs.statcounter.com/os-market-share/mobile/worldwide [2] https://www.statista.com/statistics/266572/market-share-held...
"Global Smartphone Shipments (Millions)"
https://www.counterpointresearch.com/insights/global-smartph...
Because the article is talking about semiconductor manufacturing, and the total numbers of semiconductors purchased.
Profits and monopolies are a different article.
Not sure if this is good or bad, but it's certainly unusual, and it's part of the reason that this "monopoly" question is sometimes confusing--Apple makes by far the most profit despite also selling the highest-end product, and their unit sales, despite being somewhat less than Android, are still in the same ballpark.
That is actually terrifying, because logic dictates they make up profit in other ways. I can imagine how an ad company or nation state can go about it.
The vivisection of the PC division, the semiconductors, iOS, iPhone, and iPad into separate companies would be deeply satisfying.
Shareholders might actually applaud the results in the end.
But I find an article that doesn't even address any other companies a little hard to swallow. Are other companies simply not able to "reshore" chip fabs?
I have no idea what some of the tidbits thrown in about the apple watch has anything to do with the topic. Let alone some of the heavy handed lines in the article that simply aren't supported as far as I can tell.
Some of the lines in this article seem borderline hysterical...
I urge you to look at the earnings of some of the most popular chip manufacturers and then look at the earnings of apple (also ignore nvidia as it is an obvious outlier). Creating a modern chip fab takes A LOT of money and is simply impossible when some of the most popular semi companies struggle to even make a small profit. TSMC's fabless business model allows many chip companies to share the capital investment required, but apple just straight up has the money to make the investments but choose not too. Also it would be quite scary if apple is allowed that type of vertical integration.
Why would that be? It’d free up TSMC’s top shelf capacity to other manufacturers.
Scary in what way?
The title tends to give this impression, to be honest.
Basically, it's mostly: Apple is lying with their marketing, here's what proves they really don't care about moving production to US, but only about price and their profit margins.
Because Apple's dominant position as a monopsonist means it has price setting power and depresses the profits in the chip industry, making all but the cheapest locations effectively unsustainable. Monopsonists essentially absorb the profits of their suppliers. This is for example why nationalized health services are cheap.
Intel has fabs in the US, doesn't seem to me after a couple readings that the article isn't about CPU fabs, its about the semiconductor supply chain.
> Some of the tidbits thrown in about the apple watch has anything to do with the topic
They seem part and parcel with ex. the App Store mentions, antitrust, and monopoly references.
> Let alone some of the heavy handed lines in the article that simply aren't supported as far as I can tell.
Such as?
Apple also did that because it is a _business_, and has not always been the behemoth it is today. They went overseas because it made more sense, not because they had some anti-American goal of crippling US mfg capabilities.
The AELP is, ideologically, a anti-big-co institute, which is admirable but is also why this piece engages in post hoc ergo propter hoc rather than discussing meaningful policy proposals:
> The American Economic Liberties Project launched in February 2020 to help translate the intellectual victories of the anti-monopoly movement into momentum towards concrete, wide-ranging policy changes that begin to address today’s crisis of concentrated economic power
Now you're on the hook for showing us a company that cares more about people than profits... and I mean actually cares where it counts, in budget and headcount and not just in gauzy HR propaganda.
https://www.canalys.com/newsroom/global-smartphone-market-q1...
If not, then the logic is strenuous at best, you just viscerally hate Apple and want to find reasons to blame it as opposed to doing anything constructive for the American Semiconductor Industry. Something constructive would involve fixing the work ethic of American Semiconductor Factory employees which seems to be heavily lacking compared to their Taiwanese counterparts, a problem that we don’t see with say the AI workforce or any upper order white collar workforce.
How do you pinpoint this to be the problem? How are you sure that it's not some narrative used by corporate to excuse outsourcing or putting pressure on wages?
I think an industry where technical knowledge was outsourced for cost cutting reasons for decades now is probably having issues because only the managers are left, and they're not productive on their own. Blaming it on the factory worker seems uncalled for.
My anecdotal experience aside, there have been quite a few news articles about TSMC’s struggle in Arizona that highlights the difference in work ethic: https://restofworld.org/2024/tsmc-arizona-expansion/
If your app shows ads, apple customers are more valuable.
If your app sells any kind of product apple users buy more.
Market power is not determined by the number of users but by control of revenue.
When a buyer has outsized market power it's called a monopsony.
I guess that's the concept gp is reaching for.
A monopoly using anti-competitive tactics attracts regulatory review, but anti-competitive tactics are forbidden for both small and large companies.
Regardless of what you call it, any market vertical that you can define with less than 5 genuine competitors invariably winds up being anti-consumer and needs to get broken up.
Apple is the focus here, but Google is no better and neither is Microsoft. Search, messaging, email, video--all of these are easily definable market verticals.
All of these need to get broken up until we have at least a half-dozen competing companies in those spaces.
This isn't limited to tech. Grocery store chains, industrial suppliers, financial companies, etc. all need to get smacked with the same breakup stick--especially if we want not just to not only stomp out anti-consumer behavior but also to have genuine supply chain resilience.
I'm not sure what the author is suggesting here. They licensed technology from Imagine Technologies, so therefore they must continue licensing their technology?
Also: Imagine Technologies is a chip designer, not a chip fabricator. It's stuck in at the end of a paragraph about Apple's suppliers, but unless I'm mistaken—which I absolutely could be!—Imagine Technologies wasn't one. Also it's a UK company, so I'm not sure how Apple ending their contract with Imagine Technologies hurts the US's semiconductor problem.
I think you're overreading it. I don't think the author is arguing that Apple must stay a customer. Rather they are making a point about how much power Apple has a company. They clearly have the power to make or break other companies. That of course doesn't make the rest of the article correct, but the point about Apple being very powerful does make sense to me.
Maybe, but to me it reads more like "I'm writing a piece complaining about Apple, so I'll bring up every complaint about Apple I can think of, even if they're not really related to the article topic itself".
It's not just about semiconductors, but the entire supply chain.
https://www.theatlantic.com/business/archive/2012/01/why-the...
https://www.nytimes.com/2019/01/28/technology/iphones-apple-...
The Imagination Technology example in particular is poor since they were a supplier of intellectual property, not physical goods. So Apple’s usage of them as a supplier had limited bearing on the firm’s other customers or lack thereof. Similarly, the ban of Apple Watches over IP theft has nothing to do with the supply chain issues that the authors attempted to outline.
The thesis is also all over the place. The title indicates the problem is semiconductors, but then lots of the arguments have to do with suppliers outside of semiconductors. If Apple’s reliance on TSMC is the big problem, then why isn’t even mentioned that TSMC is the only competitive fab on cutting edge nodes?
Lastly, the overarching theme is severely misguided. All of these supply chain dealings are as old as semiconductors themselves. When the industry moved towards targeting consumer electronics in the 70s, semiconductor manufacturing moved out of the US long before Apple was relevant. And if Apple weren’t a powerhouse of consumer electronics today, other companies would be doing the same things. It’s just part of the nature of trying to manufacture and sell mass market electronics.
With as much expertise as the author has. I didn't read solutions or ways forward. I suppose the main objective is awareness?
Then it goes on to state that Apple stole technology when that is not actually a fact -- it's part of an ongoing legal battle that hasn't been proven (innocent until proven guilty in America right? Right?).
So, it just comes across as a weird hit-piece with some pretty shaky arguments.
The Soviet situation is top down planning based on what "should" be produced. Actual consumer demand isn't important. The Soviet union would decide some years that industrial equipment was the priority, then years later consumer goods.
Apple is bottoms-up (through customer and market data), with the leadership approving recommendations from the bottom based on what the consumer wants.
How do you "create an environment" without "imposing more rules"? If you don't really do anything, status quo remains. I guess you could be referring to rules that need to be abolished, so I wonder which ones are really stopping competitors to Apple from springing up that we should do away with?
What would that be exactly? Seems like an easy thing to say without specifics, but things like environmental rules and minimum wage laws exist for reasons. If those are obstacles, I'm not sure they're worth discarding.
If Apple had not been there, are we saying manufacturing would have stayed onshore - steel foundaries, car factories and chip manufacturers- I mean China and India account for over 3 billion people, who want roads, houses, cars and washing machines. Where else are the factories going to be - the weight of demand means even if US owned the factories they would still be in Guangdong.
So yeah, Apple probably misuses its market power, but it’s hard to imagine it did anything but tip the playing field further down the way it was already pointing.
So if we tax or punish Apple, do we really think it will all flip back?
My personal take is that energy and computing are the things that need to be in shored - no matter the cost differential. Industrialised counties, hopefully, will become energy independent (lots of solar, lots of insulation, lots fewer transport) and computing is going to be similar - focus on that verifiable secure designs
"With this position, Apple uses its outsized buying power to squeeze the margins of its suppliers such as Foxconn, leading to poor pay and terrible working conditions in Chinese factories."
So Foxconn is either choosing to not do business with Apple's competitors who would pay more (??), or the competitors can't place orders of the magnitude that Apple can and Foxconn workforce would just be smaller with a lot less people being employed.
The intellectual dishonesty in the argumentation is so bad that I'm pretty sure I'll skip future Matt Stoller articles.
But there's a hint of dishonesty in your retort too: obviously, there are competitors who would pay more (and they are paying more elsewhere, since their margins are so much smaller than Apple's), but for much smaller quantities of production. A supplier like Foxconn can't afford to lose a customer like Apple because they were already selling their services cheap with low margins. Apple is basically squeezing them ever more — instead of growing business needs leading to improved conditions for employees, Foxconn is forced to provide more for less because Apple can demand that "or else".
I am not saying this is true, but this line of thinking is still obvious just from the short quote you posted.
> (economics) a market in which goods or services are offered by several sellers but there is only one buyer
well that is my new word of the day I guess, not a bad one at that
I've been involved in a few exercises to decide what type of machine to use as a standard developer spec device. MacBooks generally turned out to be our best option when taking all requirements into account.
Linux-based offerings are getting steadily better, which is a good thing, but levels of support are still a bit of a problem.
In the 2 other companies, I started work with my personal Linux computer but they forced me to switch to a company-supplied Macbook later. It's not about costs.
I'm sorry what? Poor pay and working conditions in the semiconductor hubs of China has been a problem as long as and before Apple made the iPhone. Apple certainly isn't HELPING that situation, but none of them are. All these fabs have made the news at different times for everything from suicide prevention nets to using slave labor to make Apple products, sure, along with every other major tech OEM in the business. I'd be shocked if you could find ANY large manufacturer of these things that hasn't been embroiled in one scandal or another over shitty conditions in their factories.
> Even for the American suppliers who have managed to stay in business, things are hard. With Apple accounting for most or all of the revenue of many of its suppliers—by buying most of their output and blocking its competitors from using similar components—suppliers “dare not put a foot wrong” by speaking against Apple, or even mentioning it by name.
Then how do you know if they refuse to talk about it? This feels like a piece banking on outrage clicks about Apple.
> In 2017, when Apple announced it was moving away from using UK-based Imagination Technologies for graphics processors, the company lost two thirds of its value overnight. Apple’s monopsony power means component suppliers have few buyers.
Yeah, Intel lost a bunch on the stock market too when Apple announced they were rolling their own silicon. Losing Apple as a client is absolutely going to suck for any supplier and a stock dip makes perfect sense in that situation.
Like, none of this is strictly wrong but it's just describing the highly centralized nature of this industry. None of this is unique to Apple. I'm sure Samsung would have no issues at all swinging suppliers by the tail if they were so inclined to do everything outlined here, and I'm sure they have too.
Edit: TIL about the word monopsony.
When the dominant player comes to town specifically BECAUSE of these terrible conditions and low prices, and use their market power to push prices even lower, they are absolutely part of the problem.
It's not unique to Apple, but Apple is far better at it and far more focused on it than anybody. It's Tim Cook's particular strength, why he took over after Jobs died and has been a major focus of the company.
I didn't read it as "Apple is the problem because they are evil", but as "Apple is the problem because they reached a critical scale in this industry".
No need to rush to defend Apple for being accused to focus on profit, no need to start 'Whataboutism' how other companies have similar goals. Someone describing how Apple took actions in the interest of maximizing its profit is NOT slander or bashing, it is FINE that they do that.
The article talks about Apple’s sheer size as a buyer and how their actions contributed (and partially even caused) the current state of this supply-industry, and how important it is to understand this and evaluate careful steps to counter this trend.
It also describes how Apple's narrative of being a "good corporate citizen" for forcing its suppliers to setup small-volume production in US is only half of the story, and WHY that is. And this is important to state as well, because Apple is and will continue to focus on maximizing its own profit, which is NOT making them the enemy, but also not an ally.
Now they pay the price
That's what happen when your government consists of clueless warmongers
"Oh no, Samsung is developing their own homemade industry, sabotage! quick!"
Yeah so here it is. The moment you start talking command and control economies you need to GTFO the room.
One of these citations isn't even about chips, but he kind of implies it is. Not to mention, he said that apple stole technology. That has not been proven, the court case hasn't happened yet. Citing sources out of context, and making untrue claims about what the source says, makes the article less compelling in my opinion.
So prices are so low, they can only be made using boarderline slave labor.
I think their products are genuinely competitive. It's not just marketing.
As far as I’m concerned nobody’s even trying to compete with Apple. There are other personal computing products but none of them address the same market as Apple at all. The tiny set of possible competitors for their space all seem to have decided not to even try.
[edit] and, to be clear, I’d very much prefer that they had competition in their segment. Even if I stuck with them, it’d at least put competitive pressure on them to improve and/or cut prices.
I wasn't that impressed with Android long ago, but decided to give it another look last year when I helped a family member buy a top of the line phone.
Android is still not comparable.
Of course, it all depends on what the end user is looking for, but at least for overall quality of Apple phones is higher both in hardware and software.
While they make a gross margin of 46.3% overall, that’s mostly buoyed by the high margin on services, not on the products.
It’s 100% about borderline slave labor pay. I used to think it was because chip manufacturing is very nasty but I think it’s both pay and subpar working conditions.
This is the part I don't understand... they have placed orders with the new fabs that aren't even built yet. How are they killing American manufacturing if there is no American manufacturing for them to buy from?
Also, 200 years ago was the development of colonial empires, which is pretty much the opposite of what you say.
