... then Samsung can also make a phone for 1 cent, and they might try to steal share by selling for $400, and some consumers would switch, etc.

TSMC's revenue grew too much during the pandemic. It's just normal it should contract when things go back to normal.

Yes, but in isolation it isn't evidence of an economic downturn in general. It is evidence of the whiplash of consumer demand shifting during COVID from services to goods and back again along with the cost of retooling the industrial plant to match that demand. There's a range of ripple effects across industries that will be ongoing for some time.

Cause in healthy capitalism, a competitor could step in and sell it for $999 and Apple would lose market share quickly.

No they can't. You're neglecting the various moats that an entity like Apple enjoys with the iPhone.

First you have to be able to actually build a similar or superior product. You can't do it. Elite of elite tech engineering companies like Samsung can just barely keep up generation after generation. The investment required to build your $999 competing phone is comically enormous. You won't even be able to get access to enough chips to do it, much less have the manufacturing capacity to deliver at any meaningful scale given the components.

Do you have tens of billions of USD in cash ready?

You need to build a brand that consumers desire, such that they'll even want to spend $899 or $999 instead of picking up the iPhone at $1000.

Do you have another block of tens of billions of USD in cash ready, for marketing, brand building, advertising?

You need an extraordinary logistics system globally.

Do you have another block of tens of billions of USD in cash ready to build, deploy, refine your global logistics network?

Apple has ~$114 billion in annual operating income, most of it (including its ecosystem) is riding on the back of the iPhone. If it could be done, somebody would take that giant pot of gold from them. Even if a competitor could take 1/4 or 1/2 of that pot of gold, they'd move on it in a heartbeat. They can't do it, not even remotely close.

And then time. It'll take you a decade to get there, absolute best case scenario.

What Apple is reaping, is decades in the making, and required hundreds of billions of dollars in capital to be deployed over that span of time. Good luck.

A world in which Apple could build iPhones for 1 cent would be a world in which those moats did not exist.

Because if iPhones cost 1 cent to produce, the cost of everything that goes into producing them would have to be trivial. Which means any competitor could easily do the same as Apple is doing.

Of course that's not the case in our actual world; in our actual world, it would cost a huge amount of money for any competitor to do the same as Apple is doing. But that's my point: that very fact is why it costs Apple a lot more than 1 cent to produce an iPhone. Apple has expended huge costs on developing the product and keeping it ahead of competitors, and those costs amount to a lot more than 1 cent per iPHone. The high price they charge for iPhones is how they recoup those costs.

In other words, in the hypothetical I was responding to, Apple could not have done what they actually have done to make the iPhone a high end preferred product. Which means that all the moats that exist in our actual world because Apple did all those things to make the iPhone a high end preferred product, could not exist in that hypothetical world.

Does that mean the hypothetical is basically useless in understanding Apple's position in our actual world? Yes. That was part of my point.

Apple falls in the middle of those two axioms. If Apple could pull of an iPhone for 1 cent there would be a flood of entrants into the market doing the same thing as making the things would be cheap and easy. At first some would pay the premium (pay for the name) but after awhile that premium would erode and it would seem odd to pay when you can get the same thing for wildly less money.

It's Apples install base, app ecosystem, and social moat (iMessage) allows continued high gross margins on their hardware and locks competition away from their profit center. The sale price has very little to do with the marginal cost of production and a ton to do with a naturally occuring software monopoly.

Apple also pursues this strategy, but they don’t push it nearly as far as Samsung. The cheapest iPhone, the SE 3 at $430, has a 5 nm chip in it, which they only released two years ago. Apple just isn’t willing to release a parts-bin device, because they have a high quality bar. This is part of a moneymaking strategy, but my point is you can’t compare the A03 price to any current iPhone model.

Apple’s hardware margin is 35%, that is a reasonable estimate of the premium Apple is charging over a totally generic phone.

The are not totally a monopoly. They may be that in some peoples influence. But mine for example my parents literally would not be able to tell the difference between a generic sub 50 dollar phone and a 1500 one. They do not use any of the extra features and it would be meaningless to them. For some people it is about the status of that logo on the back. For others it is the tech stack and integration. For others it is just something to text and phone with.