A look inside Apple’s relationships with Intel and TSMC

07/09 09:30 - A look inside Apple’s relationships with Intel and TSMC
Former Apple chip supplier Intel has faced a lot of challenges since Apple ceased to be a client. It struggled to win back some of Apple’s processor manufacturing business, but seems to face one fundamental challenge — trust. That’s the very briefest gist of an extensive and outstanding report today from Culpium, which gives us an insider look at the relationship between the firms. It’s particularly relevant, given that the Trump Administration has announced that Apple agreed to work with Intel in the future. (TSMC is Apple’s current supplier and that relationship seems very solid.) The root of the challenge The problem with Intel, according to the report, is that a lack of trust drove Apple to seek an alternative processor supplier in the first place. The report discusses some of those challenges, including Intel’s failure to keep the pace with Mac chips, which is why the M1 chip astonished the industry, because it gave Apple the performance it had always sought. How we got here The root of that release was mobile, of course. Apple’s A-series chips were built for mobile and eventually transcended to become M-series Mac chips. Intel turned Steve Jobs down when he asked it to make mobile processors, pushing Apple to TSMC. The history is more complex than that, of course — Apple also acquired chip development expertise from PA Semi, for instance — and established a foundry deal with TSMC that meant the company produced Apple-designed chips. The work Apple did on mobile processors eventually enabled the move to Apple Silicon. That’s the history. Fast forward to today and an ailing Intel needed new client wins even as the Trump Administration sought to support onshore processor production; it’s a strategic need for the US. The problem is, as Culpium terms it, that Intel isn’t willing to build manufacturing capacity until it wins the supply contract. And Apple needs a much firmer promise than that to supply its huge mass market. It needs capacity before it can provide trust. Telling tales too soon? During the most recent negotiations concerning Intel’s capacity to deliver chips in quantity, the report tells us Intel somehow managed to challenge that trust by telling third-party partners that it had secured Apple as a client. Anyone who knows Apple will recognize that the company doesn’t like its business discussed that way. “A sure sign that the two companies may be on the path to some serious cultural clashes,” wrote Culpium. TSMC, meanwhile, has a corporate commitment to trust, a promise recognized across the industry — even by Nvidia founder Jensen Huang. That trust extends into tomorrow, which is why TSMC invests vast sums in developing process technology it believes customers will need tomorrow, rather than waiting for them to order up capacity today. That’s also why TSMC today offers some of the world’s most advanced interconnects, enabling powerful tech that likely includes Apple’s M5 Ultra. But just as important as technology and manufacturing capacity is a trusted relationship between companies.  That’s not to say capacity doesn’t matter. It does. And as Apple continues to sell its products in ever greater quantities, it knows it must source additional supply; that’s why it speaks to Intel, Samsung, or even CXMT about the components its products require. But ultimately, a company that historically has felt let down by numerous key competitors — think Google, Samsung, and Android or, more recently, elements of OpenAI — will place a great deal of value in discretion and corporate trust. After all, Apple has learned that in the ultra-competitive market in which it exists, what some call paranoia will in the end be seen as business sense. You can follow me on social media! Join me on BlueSky,  LinkedIn, Mastodon and subscribe to The Core. ...