00:00Bloomberg has learned that Apple is considering using Intel and Samsung to manufacture the main
00:05processors for its devices to reduce its reliance on its current partner, TSMC. For more, Neil
00:11Campling, Bloomberg's senior strategist, joins me now. Neil, good morning. I do wonder what we know
00:18about this potential deal so far. I think we have to remember that the relationship between TSMC
00:23and Apple goes back 20 years. It's been a fantastic relationship. If we look at TSM's own revenues
00:29now, NVIDIA, because of its high growth, is now around 20% of revenues and Apple is around 17%.
00:35So they're clearly a key partner. Now, I think this is partly business continuity risk. And it's also
00:42the fact that, you know, Apple needs to look to sort of more closer suppliers, if you like, within,
00:49say, in the US, given the geopolitical tensions and perhaps kind of globalization concerns, etc.
00:55Now, Samsung has a leading edge fab in the US already. TSMC has a fab in the US, but the
01:04leading
01:04edge, which is required for this Apple technology, is not due ready until 2029. So we may be looking
01:11here at sort of a business risk and reducing that risk by looking at alternative suppliers.
01:18Intel hasn't really been a viable option for many years because it hasn't got the leading technology.
01:24With the US government investment and with the recovery in the business, they have a better
01:30balance sheet to invest in those technologies. So I think Apple's being sort of clever in terms
01:35of looking at alternatives. But that said, TSMC, that relationship remains very, very strong.
01:41And this is probably a second source alternative that Apple are looking to, which makes a lot of
01:46sense. Yeah. Something that Tim Cook has warned about for a very long time.
01:49Absolutely. We heard last week, actually, that Apple mentioned that they had supply constraints
01:55for some of their devices. Now, they guided to a very strong forward looking quarter. How strong
02:00would that have been if they were able to have more supplies? So actually, again, supply constraints
02:05that had an issue during COVID for Apple. We've got issues potentially at the moment with some of the
02:10logistic issues. So this makes a lot of sense, I think, to look for a second source,
02:15if that becomes viable, if the technology is as good as TSM.
02:19And if they can get it done in time, it seems like it'll be quite a while before they can.
02:23Neil, thank you very much. That's Bloomberg Senior Strategist, Neil Campling.
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