> Regardless of that, fab industry is based on a short and mid term auction-like planning

Not a system that necessarily works all that well if one player has a short-term ability to vastly outspending all the rest.

You can't let all your other customers die just because Nvidia is flush with cash this quarter...

> die

Is the argument that Apple will go out of business? AAPL?

Wait,

> one player has a short-term ability to vastly outspending all the rest.

I assure you, Apple has the long-term and short-term ability to spend like a drunken sailor all day and all night, indefinitely, and still not go out of business. Of course they’d prefer not to. But there is no ‘ability to pay’ gap here between these multi-trillion-dollar companies.

Apple will be forced to match or beat the offer coming from whoever is paying more. It will cost them a little bit of their hilariously-high margins. If they don’t, they’ll have to build less advanced chips or something. But their survival is not in doubt and TSMC knows that.

That's exactly how it is supposed to work and Apple has outspent competitors for ages getting prio.

TSMC isn't running a charity, it sells capacity to the highest bidder.

Of course customers as big as Apple will have a relationship and insane volumes that they will be guaranteed important quotes regardless.

Why should it be short term, though?

If it takes 4 years to build a new fab and Apple is willing to commit to paying pay the price of an entire fab, for chips to be delivered in 4 years time - why not take the order and build the capacity?

I mean, these things are likely already written down and Apple still gets lots of capacity for the reasons you mention.

But Nvidia has also spent billions/year in TSMC for more than a decade and this just keeps increasing.

> Not a system that necessarily works all that well if one player has a short-term ability to vastly outspending all the rest.

Well yeah, people were identifying that back when Apple bought out the entirety of the 5nm node for iPhones and e-tchotchkes. It was sorta implicitly assumed that any business that builds better hardware than Apple would boot them out overnight.

> It was sorta implicitly assumed that any business that builds better hardware than Apple would boot them out overnight

It's not "build better hardware" though, it's "continue to ship said hardware for X number of years". If someone buys out the entire fab capacity and then goes under next year, TSMC is left holding the bag

It's not that, either. Low-margin, high-volume contracts are the worst business you can take. It devalues TSMC's work and creates an unnatural downward force on the price of cutting-edge silicon. By ignoring Apple's demands they're creating natural competition that raises the value of their entire portfolio.

It really is about making better hardware. Apple would be out-bidding Nvidia right now, but only if the iPhone had equivalent value-add to Nvidia hardware. Alas, iPhones are overpriced and underpowered, most people will agree.

> but only if the iPhone had equivalent value-add to Nvidia hardware... iPhones are overpriced and underpowered, most people will agree

I'd argue this from almost the opposite direction - there is no value-add for Apple because high-end smartphones exceeded the performance requirements of their user-base generations ago.

Nvidia has a pretty much infinite performance sink here (at least as long as training new LLMs remains a priority for the industry as a whole). On the smartphone side, there just isn't the demand for drastic performance increases - and in practice, many of us would like power and cost reduction to be prioritised instead.