Apple products are nowhere considered cheap. Most of the products from the Cupertino giant are priced in the expensive segment, but according to a new report, you may even end up paying more for the upcoming Apple products. According to a report from Nikkei Asia TSMC is the latest victim of the short chip’s supply.
Taiwan Semiconductor Manufacturing Company, or TSMC, is Apple’s primary supplier for chips. Apple gives its chips design to TSMC, which then mass-manufactures it for the company. But, according to Nikkei Asia, TSMC is in the process of increasing its prices following wider inflation in the industry caused by the global chip supply shortage. The price increase is said to be the “most substantial” chip price increase in the last decade.
TSMC is already said to be asking for a 20% more premium than its rivals. But with the Silicon shortage, small foundries have already increased their prices, bringing it on par with TSMC. The price hike is also due to one more factor. According to the report, clients double-book TSMC’s production line — place orders for more chips than they actually need — in order to secure orders, which has made it difficult for TSMC to predict “real demand” for the chips.
According to Nikkei Asia, this will filter our the clients who don’t need so many chips at high prices.
“These higher prices stem from a range of factors, including higher material and logistics costs as well as the race by device makers to secure adequate chip supplies, that have emerged since the chip shortage first began to bite late last year.“
But what does this mean?
In short, TSMC raises its prices for clients, Qualcomm, for example. Sources speaking to Nikkei said that chip developers like Qualcomm will pass TSMC’s price increases onto device makers such as Apple. In case you’re unaware, Apple uses Qualcomm’s modems in its iPhones and iPads. This increased cost to Apple will probably result in increased prices of products for the end customer.
The report says the price bump is expected to be “noticeable.”