In the recent earnings report, Apple saw a decline in sales of its three major products— iPhones, iMac and iPads. iPhone  sales revenue went down by 2.4% to $39.7 billion in this quarter as compared to the corresponding quarter last year. While Mac Book sales fell by 7.3% to $6.8 billion.  

One of the expected reasons for the same can be attributed to the absence of a new processor in them. The iPhone 14 and 14 Plus were  powered by Apple’s A15 Bionic chip, the same chip that’s in the iPhone 13 Pro. It seems like Apple is not going to repeat the same mistake this time and is planning to pack a punch in the new Macbook and iPhone 15 Pro. 

TSMC’s Generous Deal 

When the iPhone 15 Pro launches in September, this year, it is rumored to come up with the A17 chip, Apple’s first ‌ 3nm developed by TSMC.

The ‌3nm‌ node allows transistors to be even more densely packed, resulting in better performance and efficiency. Recently, The Information came out with an interesting revelation which says that TSMC has come up with a sweet deal for Apple through which it would be able to save billions of dollars on iPhone, iPad and Mac chips. 

When new and better chip technology like the ‌3nm‌ is introduced, there are often some chips that don’t work perfectly at first. TSMC, the company making these chips for Apple, usually charges for all the chips on a wafer, even the ones that don’t work. But in this new deal, TSMC is only charging Apple for the good chips, and Apple’s big orders help cover the costs of the chips that don’t work, which is unusual. 

Apple covers about 25% of TSMC’s revenue, which helps TSMC develop new technology and build the facilities needed to make these chips while testing them on Apple products.The orders from Apple are so big that it makes sense to spend a bit more money to help Apple out.  

The strong bond between Apple and TSMC is no shocker, given their nearly decade-long partnership. The journey kicked off around ten years ago when Apple shifted its iPhone’s processor chip production to TSMC.  The first Apple designed mobile application processor chip for the iPhone to be manufactured at TSMC was the A8 which began shipping in the Fall of 2014 after Apple broke up with Samsung. 

The same thing happened with the Mac when Apple broke up with Intel. The year was 2020 when Apple announced that in the next two years, the company would transition all of its Mac lineup to its own M-series chips, made by TSMC rather than depending on Intel. It’s  unlikely that Apple will reignite its relationship with Intel.

Not only this , Apple has recently started trying out its advanced laptop processor called M3 Max. This will lead to the launch of the most powerful MacBook Pro ever in the coming year. The M3 Max chip comes with 16 main processing cores and 40 graphics cores, as reported by Bloomberg, citing a developer of a Mac app who saw the test logs. 

This chip will be used in a high-end MacBook Pro laptop, which is expected to be released next year and is known by the codename J514. The M3 chip will be a notable move for Apple, as it’s their first time using a 3-nanometer production process for Mac chips. This change is expected to bring improvements in battery life and better performance. According to Bloomberg, the transition to M3 chips is likely to begin from October.

Will Apple diversify? 

Although industry experts think Apple should diversify its chip suppliers beyond TSMC, the reality is that Apple has consistently relied on TSMC for the past ten years. This relationship is symbiotic, where Apple receives top-notch chips and TSMC gains its biggest customer. Apple’s influence is significant, to the extent that TSMC is even considering building a production facility in Arizona, USA. Apple has stated its plan to eventually get chips for iPhones and MacBooks from TSMC’s US plant. It won’t be wrong to say that behind every successful Apple product there is TSMC which is working silently behind the scenes without grabbing any limelight.