Source: Taiwan Semiconductor Manufacturing Co., Ltd.

What you need to know

  • A new report says Apple's reliance on TSMC could be a weakness.
  • Apple relies on TSMC for chips like the A15 Bionic of iPhone 13 and Apple silicon in the Mac.
  • Insight warns of geopolitical conflict and natural disasters as potential threats.

A new report highlighting Apple's close relationship with TSMC says the company's dependence on the chipmaker could be a weakness.

TSMC makes the A15 Bionic chip in the iPhone 13, and all of the chips in Apple's other best iPhones, as well as the M1 Pro and M1 Max in the new MacBook Pro (2021) Apple announced a couple of weeks ago. The Information writes:

Still, Apple's reliance on TSMC could become one of its biggest vulnerabilities. Geopolitical tensions between China and Taiwan—where all of the TSMC factories that produce Apple chips are based—are rising, and while military conflict between the two countries doesn't appear imminent, it could be devastating to Apple's supply chain if it comes to pass.

The report notes geopolitical conflict, natural disasters, and "technical foul-ups" as risks "that are magnified by TSMC's status as the single source of Apple's processors." The report notes Apple account for around a quarter of TSMC's revenue, making the heavy reliance mutual. The report further states that Apple doesn't seem too fussed about finding a backup chipmaker, with TSMC's closest competitors lagging behind in technology and capacity.

The report notes a couple of snippets. As expected 3nm chips do not seem to be in the frame for iPhone 14, and TSMC is helping Apple with its Apple VR headset, making a chip code-named project Bora for the VR hardware rumored to be on its way from Apple.

Apple warned it had missed out on $6 billion in revenue in Q4 because of supply constraints, and that it expects things to get worse going into the holiday season. A report today says Apple is cutting iPad production by up to 50% to help meet iPhone demand.

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