TSMC Not Charging Apple for Defective 3nm Chips Ahead of iPhone 15 Pro Introduction

Chip supplier TSMC has taken the unusual step of not charging Apple for defective 3nm chips ahead of the introduction of the iPhone 15 Pro and the A17 Bionic chip, The Information reports.

tsmc semiconductor chip inspection 678x452
The ‌iPhone 15‌ Pro is widely rumored to feature the A17 Bionic chip – Apple's first chip manufactured with a ‌3nm‌ fabrication process. The ‌3nm‌ node allows transistors to be even more densely packed, resulting in better performance and efficiency.

Introduction of upgraded chip technology like ‌3nm‌ involves the production of a high number of defective chips until the manufacturing process can be perfected. According to The Information, TSMC is only charging Apple for "known good dies," with no fee for defective chips. This is highly unconventional, since TSMC clients usually have to pay for the wafer and all of the dies it contains, including any defective ones.

Since Apple's orders from TSMC are so large, it can apparently justify absorbing the cost of defective chips. Apple's willingness to be the supplier's first customer for new manufacturing processes helps it pay for the research and development of new nodes, as well as the facilities to make them.

The size of Apple's orders also enable TSMC to more quickly learn how to improve and scale up a node during mass production. Once production and yield issues with manufacturing ‌3nm‌ chips improves and other customers seek the technology, TSMC can demand higher prices from those clients, as well as charge for defective dies.

Update: According to Apple analyst Ming-Chi Kuo, The Information's report is not quite accurate. Kuo says that Apple's standard deal with TSMC does not ever include "defective" chips. Apple purchases "finished goods" that are of the expected quality rather than "wafer-buy," which can include defective chips.

Most chip buyers have a "wafer-buy" deal with TSMC and must eat the cost of defective chips, but in the case of TSMC and Apple, TSMC absorbs the cost through the price of the chips.

Popular Stories

maxresdefault

Apple Releases iOS 18.4 With Priority Notifications, Ambient Music, New Emoji and More

Monday March 31, 2025 10:03 am PDT by
Apple today released iOS 18.4 and iPadOS 18.4, the fourth major updates to the iOS 18 and iPadOS 18 operating system updates that came out last year. iOS 18.4 and iPadOS 18.4 come two months after Apple released iOS 18.3 and iPadOS 18.3. Subscribe to the MacRumors YouTube channel for more videos. The new software can be downloaded on eligible iPhones and iPads over-the-air by going to...
iOS 19 Mock WWDC25 Feature

iOS 19 Expected to Run on These iPhones

Monday March 31, 2025 5:28 pm PDT by
iOS 19 will not be available on the iPhone XR, iPhone XS, or the iPhone XS Max, according a private account on social media site X that has accurately provided information on device compatibility in the past. The iPhone XR, iPhone XS, and iPhone XS Max all have an A12 Bionic chip, so it looks like iOS 19 will discontinue support for that chip. All other iPhones that run iOS 18 are expected...
iPhone 17 Pro 34ths Perspective

iPhone 17 Pro Launching Later This Year With These 10 New Features

Sunday March 23, 2025 10:00 am PDT by
While the iPhone 17 Pro and iPhone 17 Pro Max are not expected to launch until September, there are already plenty of rumors about the devices. Below, we recap key changes rumored for the iPhone 17 Pro models as of March 2025: Aluminum frame: iPhone 17 Pro models are rumored to have an aluminum frame, whereas the iPhone 15 Pro and iPhone 16 Pro models have a titanium frame, and the iPhone ...
AirPods Pro Firmware Feature

Apple Releases New Firmware for AirPods Pro 2 and AirPods 4

Monday March 31, 2025 11:27 am PDT by
Apple today released new firmware updates for all AirPods 4 and AirPods Pro 2 models. The new firmware is version 7E93, up from the 7B21 firmware that was installed on the AirPods Pro 2 and the 7B20 firmware available on the AirPods 4 and AirPods 4 with ANC. It is not immediately clear what new features or changes are included in the new firmware, but we'll update this article should we find ...
top stories 2025 03 29

Top Stories: WWDC 2025 Announced, iPhone 17 Pro and iOS 19 Rumors, and More

Saturday March 29, 2025 6:00 am PDT by
Apple's big developer event is a little over two months away, and rumors about what we can expect to see in Apple's next major operating system updates are becoming increasingly frequent. A public release of iOS 18.4 is also imminent with a number of updates and improvements, although we won't be getting the major Apple Intelligence Siri upgrades that had reportedly been planned for this...
iOS 19 visionOS UI Elements

Apple Codename Provides Clue About iOS 19's Rumored New Design

Sunday March 30, 2025 6:40 am PDT by
Multiple sources have claimed that iOS 19 will introduce a new design with more translucent buttons, menus, notification banners, and more, and there is now another clue that points towards this glass-like appearance. Bloomberg's Mark Gurman today said the new design project is codenamed "Solarium" internally. A solarium is a room with glass walls that allow in plenty of sunlight, so this...
macOS Sequoia Feature

Apple Releases macOS Sequoia 15.4 With Mail Categorization and More

Monday March 31, 2025 10:04 am PDT by
Apple today released macOS Sequoia 15.4, the fourth major update to the macOS Sequoia operating system that launched in September. macOS Sequoia 15.4 comes two months after the launch of macOS Sequoia 15.3. Mac users can download the ‌‌macOS Sequoia‌‌ update through the Software Update section of System Settings. It is available for free on all Macs able to run macOS 15. With...
Magic Mouse Green

What to Expect From the Magic Mouse 3

Saturday March 29, 2025 10:15 am PDT by
Apple is reportedly working on a new Magic Mouse. Below, we recap what to expect. The two key rumors for the Magic Mouse 3 so far include a relocated charging port, along with a more ergonomic design. It was briefly rumored that the Magic Mouse 3 would also feature voice control, but that was misinterpreted information. Relocated Charging Port While the Magic Mouse switched from...

Top Rated Comments

NT1440 Avatar
22 months ago

Only a company with Apple's influence can get away with this...
They’re single-handedly funding the N3 node, so it’s not “getting away” with anything. Apple put up billions in capital investment to get this node up and running. Without them, N3 wouldn’t be produced.
Score: 32 Votes (Like | Disagree)
SigurTom Avatar
22 months ago
Makes sense, I only pay for known good iPhones.
Score: 26 Votes (Like | Disagree)
jecowa Avatar
22 months ago
The way I heard it was that TSMS's 1st-gen 3nm process was not very desirable by customers because of its yield, and Apple was kind of saving them by using it. So maybe not charging them for defects is their thanks back to Apple.
Score: 22 Votes (Like | Disagree)
jz0309 Avatar
22 months ago
Unusual? Been in semi industry for decades and a lot of companies pay for “known goo die”…
Score: 19 Votes (Like | Disagree)
teknikal90 Avatar
22 months ago

Unusual? What kind of moron pays for broken materials?
according to the article, the entire industry?
Score: 13 Votes (Like | Disagree)
BorisDG Avatar
22 months ago

Sounds like TSMC is getting a high yield of 3nm chips for the iPhone 15s… ??
Around 85% which is not bad, but not perfect/optimal for sure.

Unusual? What kind of moron pays for broken materials?
They can build other products from the "defective" chips. Look at A15 for example. It has so many variations, because of yield issues:

Full A15 (5 GPU / 6 CPU cores):

* iPhone 13 Pro/13 Pro Max/14/14 Plus

Binned A15 #1 (4 GPU / 6 CPU cores):

* iPhone 13/13 Mini, SE (3rd gen)

Binned A15 #2 (5 GPU / 6 CPU underclocked cores)

* iPad Mini 6

Binned A15 #3 (5 GPU / 5 CPU cores - 1x Blizzard efficiency core disabled):

* Apple TV 4K (3rd gen)
Score: 13 Votes (Like | Disagree)