Ming-Chi Kuo Challenges Report of $1 Billion in Apple Chips Stuck at TSMC: 'Tight Memory Supply is Real,' But This Doesn't Add Up

On Monday, Apple Inc. (NASDAQ:AAPL) analyst Ming-Chi Kuo pushed back against a report that Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) is holding about $1 billion in Apple processor work-in-process (WIP).

Kuo Disputes $1 Billion Apple Chip Pileup

In a post on X, Kuo said his industry checks confirm that Apple has scaled back some hardware shipment plans this year due to memory shortages.

However, he questioned a report, saying that TSMC has accumulated roughly $1 billion in Apple processor wafers that cannot be packaged until additional memory arrives.

"Apple plans its processor production at TSMC at least three months in advance," Kuo said, based on expected memory availability.

That planning, he argued, makes it unlikely that Apple would ask TSMC to manufacture a massive amount of processor WIP before securing the necessary DRAM. If memory is the supply-chain bottleneck, building processors far ahead of schedule would provide little benefit.

TSMC Inventory Does Not Prove Apple WIP Claim

The original report by Taipei-based analyst Tim Culpan cited TSMC’s second-quarter earnings call, in which the company attributed the higher inventory days primarily to the ramp-up of its 2nm production.

But Kuo said that does not establish that the inventory consists of Apple processor WIP. TSMC’s inventory includes work-in-process, finished goods, raw materials, supplies and spare parts.

He also noted that Apple is not TSMC’s only 2nm customer, with companies including Advanced Micro Devices, Inc. (NASDAQ:AMD) and MediaTek also adopting the technology.

Apple Still Faces a Real Memory Crunch

Culpan previously reported that with less than six weeks until the expected launch of the foldable iPhone Ultra, iPhone 18 and iPhone 18 Pro, Apple and its assemblers are rushing to secure DRAM supplies for the upcoming devices.

The tech giant relies primarily on Micron Technology, Inc. (NASDAQ:MU) for memory but also sources DRAM from SK Hynix and Samsung Electronics (OTC:SSNLF).

"In other words, tight memory supply is real. But my understanding is that there has been no dramatic scenario in which TSMC first built up US$1 billion of WIP and then had to wait for memory to arrive before packaging could proceed," Kuo wrote.

Apple Beats Q3 Earnings and Revenue Estimates

Apple reported fiscal third-quarter revenue of $109.42 billion, topping analysts’ estimate of $108.65 billion, while earnings came in at $2.02 per share, ahead of the $1.89-per-share consensus.

The company ended the quarter with $39.54 billion in cash and cash equivalents.

Apple’s board also declared a quarterly dividend of 27 cents per share, payable Aug. 13 to shareholders of record as of Aug. 10.

Price Action: Apple closed 1.53% lower at $308.26, while TSMC fell 0.37% to $418.47 on Monday, according to Benzinga Pro.

Benzinga Edge ranks Apple in the 98th percentile for Quality, while the stock maintains a positive price trend across the short, medium and long term.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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