Why would you pay for stuff that doesnt work? Sounds harsh for some maybe, but its only sensible way to conduct business.

E2E is weird as it is half risk transference.

Sometimes it makes sense to pay even failed things because your overall cost is lower.

Say hypothetically that TSMC said $30 per working chip or $8 per chip and $2 to test. Taking the later choice would result in lower overall costs at current yields.

Typically for this kind of work the manufacturer wants their yield improvements to lead to reduced cost to them so only paying for what works is standard to my knowledge.

In contrast it is bespoke work that sometimes shifts, where there is no possibility for things like down binning to recover failures (disabling parts of a chip and selling for less)

at the end of the day Apple (and thus we as customers) always pay.

Doesn't matter if Apple pays only for 'good' chips (and hence TSMC will increase overall prices) or if Apple pays for all chips (and throws away a bunch, hence increasing overall prices). TSMC won't just eat up the cost completely either and wafer prices have been going up steadily.

It’s just a calculation, surely TSMC knows about these rates ahead of time. In my opinion it’s just a way for TSMC to give themselves a big bonus if they manage to improve yields.