They are making 78% of margin on those chips - I would think that that leaves a lot of bargaining power to TSMC. They would loose much less than Nvidia.
Nvidia may be working with Samsung, but they don't have any alternative for now.
So my understanding is, that TSMC currently has the monopoly on producing Nvidia chips, and Nvidia obviously has the monopoly on selling those chips.
And somehow, Nvidia is extracting 99% of profits from that situation, while TSMC is getting close to nothing. My understanding of game theory is that it should be way closer to an even split.
Could you elaborate on why the prices are defined by AMD margins ? I'm obviously missing something, but can't see what.
The way that could play out is that Nvidia wouldn't buy directly from them, but somebody else purchases cheaper from TSMC and then Nvidia buys from them.
So TSMC would have to increase prices for everyone, but then for some it would be too expensive and so they would lose those customers.
Nvidia engineers work shoulder to shoulder with TSMC to squeeze everything from the architecture even before the fab is build. TSMC makes custom job for their best customers.
For old established process it's possible to send design and get functioning chips without a huge R&D hassle and loss of performance.
Imo this depends on whether the limiting factor is demand or production.
If it's production capacity, then if in a year they're able to get TSMC to make them twice as many chips, they could likely increase their growth rate?
I'd be sweating if I were any of TSMCs other customers right now and trying to renew my contract. Idk what the ratio is in size between an H100 and an M3, but I doubt it's anywhere near proportional to how much nvidia is willing to offer TSMC.
Imagine the vindication Jensen is feeling at this point. Not even about the money, just about being so completely right after 20 years of hard work and a vision.
If you adjust for inflation I imagine they'd have some competition from the robber barons, but it's hard to imagine.