Processors are made in wafers. (Source: TSMC)
TSMC’s new 3nm manufacturing process has around a 30% failure rate but under exclusive terms, the company only charges Apple for working processors.
Specifically, TSMC does not charge Apple the complete cost when it produces a wafer containing hundreds of processors. Instead, it only charges the company for what The Information says are referred to as “known good dies.”
Ordinarily, the price difference is not statistically significant because typically some 99% of processors on a TSMC wafer are good. But at present, TSMC is only seeing between 70% and 80% success rate with its new 3nm processor, which it began mass production of in December 2022.
That will improve, but as well as Apple profiting by not paying for failed processors, so TSMC profits, too.
So Apple is helping fund the development of 3nm processors. Once the failure rate improves, and TSMC’s capacity increases, the company will be able to sell 3nm processors to other companies who do not have such a sweetheart deal.
