Yes, it is capitalism at work. Whomever pays more, decides.
Apple says something along the lines of “we guarantee to buy x million chips this year, y million next year. We know it’s expensive to build that capacity, so here’s a few billion up front”.
That’s an offer few can make and nobody else is willing to make.
The big point indeed is, that Apple pays in advance to finance the buildup of the production facilities. Of course they get the first access at the output as a consequence.
Qualcomm and AMD could have chosen to be more vigorous in their competition. Android customers would have gotten better phones, Intel wouldn’t have waited until 2021 to start making decent parts again, and everyone would win.
Maybe a more fair version would be for the federal government to socialize each of these players, and decide that they will pay a premium for slow, hot, American-made parts.
If that sounds ridiculous, meditate on why you think capitalism/markets have a negative connotation when they are in fact producing great outcomes - amazing chips (M1 series) and competitive pressure on Intel, AMD, and Qualcomm to eventually deliver similarly competitive chips.
Unbridled capitalism gets a bad rap, but that’s a relatively new innovation. You can have a well-regulated market produce even more fabulous outcomes; don’t blame corporations for those outcomes, blame politicians and the voting public.
Edit: a theme I see repeated over and over, on hacker news of all places, is people making excuses for businesses operating in competitive markets. Making excuses is bad for consumers, it’s bad for competition, it’s bad for society. Stop making excuses and ask business to work harder. Android users deserve fast processors, and it is 100% Qualcomm’s fault that they don’t have them. Intel PC users deserve fast, low-power processors, and it is 100% Intel’s fault that users don’t get them, or have to go to AMD/Apple for them. Apple’s success is proof positive that AMD, Qualcomm, and Intel have been insufficiently vigorous and innovative in their competition, which in manufacturing products also involves the surrounding business practices needed to ensure access to fab capacity.
Does that not qualify as a monopoly? No other company in the world has the amount of liquid cash Apple does, so if there really are informal arrangements like this I'd expect them to be heartily scrutinized at their next antitrust hearing.
At a much smaller scale, I have had contracts with various vendors to provide “stuff” associated with services they provide to us.
In one case, they had a facility dedicated to my company’s needs, with tooling maintained by my company. The contractor has an SLA to achieve different levels of operational readiness.
What Apple is doing is no different, except they are buying 8-9 figure tools or loaning lots of cash at favorable terms.
I certainly wouldn’t shed many years for Qualcomm, which has an actual monopoly on modems. Their lack of strategic competence isn’t Apple’s sin.
> No other company in the world has the amount of liquid cash Apple does
I'm not sure that's true these days, but, even if it is true, plenty of other companies could _raise_ it easily enough. It might make less sense for other companies, though. Like, realistically, if AMD is beating Intel already (and, for the moment, they largely are; Alder Lake is niche for now), what does being a little earlier with 3nm buy them? Is it worth the money? Perhaps not.
It's even less clear that it would be worth it for Qualcomm. For them, it's hard to see that there'd be any return; they have a captive audience already.
"plenty of other companies could _raise_ it easily enough"
This extraordinary claim that it's easy to raise 200BN is backed up by no argument or evidence?
The claim that it's more worthwhile for Apple than it is for a CPU company to have CPU production exclusivity is backed up by no argument, logic or evidence?
What can be asserted without evidence can be dismissed without evidence.
They aren't buying up all of the infrastructure. Samsung and Intel offer the same services. It's not a monopoly for a company to pre-order ahead of time. It's like Kickstarter but at a grander level.
Using lots of money to buy up all supply isn't just "garden-variety capitalism". Buying all available supply is a way to become a monopoly. You got there by having lots of money, but after you get there you are the monopoly.
Although most would argue that lower end architectures are perfectly fine replacements, so Apple gets an edge here but can't be said to be a monopoly.
Apple says something along the lines of “we guarantee to buy x million chips this year, y million next year. We know it’s expensive to build that capacity, so here’s a few billion up front”.
That’s an offer few can make and nobody else is willing to make.