alt Hacker NewsCalling Nvidia niche feels a bit wild given their status-quo right now, but from a foundry perspective, it seems true. Apple is the anchor tenant that keeps the lights on across 12 different mature and leading-edge fabs.
Nvidia is the high-frequency trader hammering the newest node until the arb closes. Stability usually trades at a discount during a boom, but Wei knows the smartphone replacement cycle is the only predictable cash flow. Apple is smart. If the AI capex cycle flattens in late '27 as models hit diminishing returns, does Apple regain pricing power simply by being the only customer that can guarantee wafer commits five years out?
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I tend to agree with you, feels to me like the root of this is essentially whether foundries will "go all in" on AI like the rest of the S&P 500. But why trade away one trillion-dollar customer for another trillion-dollar customer if the first one is never going away, and the second one might?
AI capex may or may not flatten in the near future (and I don't necessarily see a reason why it would). But smartphone capex already has.
Like smartphones, AI chips also have a replacement cycle. AI chips depreciate quickly -- not because the old ones go bad, but because the new ones are so much better in performance and efficiency than the previous generation. While smartphones aren't making huge leaps every year like they used to, AI chips still are -- meaning there's a stronger incentive to upgrade every cycle for these chips than smartphone processors.
> the smartphone replacement cycle is the only predictable cash flow
people are holding onto their phones for longer: https://www.cnbc.com/2025/11/23/how-device-hoarding-by-ameri...
Nvidia have been using TSMC since the Riva 128. That's before Apple started making any of their own silicon. GPUs are easily as predictable as mobile phones.
"Apple is smart. If the AI capex cycle flattens in late '27 as models hit diminishing returns, does Apple regain pricing power simply by being the only customer that can guarantee wafer commits five years out?"
That's the take I would pursue if I were Apple.
A quiet threat of "We buy wafers on consumer demand curves. You’re selling them on venture capital and hype"
Regardless of that, fab industry is based on a short and mid term auction-like planning.
If Nvidia pays more, Apple has to match.
I would also bet significant money that Apple's unique market position will give them the confidence to invest in in-house fabrication before 2030.
Apple has to price in the risk of the US government forcing their hand in various ways. They have a negotiating disadvantage.
On the other hand, it's not like Apple can just switch fabs without any cost or difficulty. Sure, TSMC is undoubtedly happy to have a customer with predictable needs, but Apple is also subject to some level of lock-in.
I doubt that we will hit diminishing returns in AI. We still find new ways to make them faster or cheaper or better or even train themselves...
The flat line prediction is now 2 years old...
Apple was favored by TSMC because they brought TSMC more money. Now Nvidia is bringing TSMC more money.
That's a really hilarious take given Nvidia's history with TSMC.
So let's say TMSC reciprocated Apple's consistency as a customer by giving them preferential treatment for capacity. It's good business after all.
However, everyone knows that good faith reciprocity at that scale is not rewarded. Apple is ruthless. There are probably thousands of untold stories of how hard Apple has hammered it's suppliers over the years.
While Apple has good consumer brand loyalty, they arguably treat their suppliers relatively poorly compared to the Gold standard like Costco.