Taiwanese Semiconductor Manufacturing Company (TSMC) has notified several IC designers of its price increase plan for 2023. The move indicates that the manufacturer has gotten or is confident of getting Apple approval.
Recently, it was reported that Apple had rejected TSMC’s price increase of chips by up to 6% for next year. As the Cupertino tech giant is TSMC’s biggest client, it was speculated that Apple’s disagreement over the price increase would sway the chip manufacturer to reconsider its price hike. However, it does not seems to be the case.
TSMC notification to IC designers of price increase indicates it has received Apple’s approval
Economic Daily News claims that TSMC has sent new prices to IC designers which confirms that the Taiwanese manufacturer is going ahead with its plan going into effect from Jan 2023. Under the new pricing, 8-inch and 12-inch wafers will see up to a 6% increase in price.
A number of IC designers confirmed that they received a notification from TSMC last weekend that the output of wafers from January 1, 2023 will increase across the board. Among them, the 8-inch will increase by 6%, and the 12-inch will increase by 3% to 5%.
Although the manufacturer’s price increase is considered moderate and slow than rivals, it is estimated to generate a multi-billion cash flow.
This move will help TSMC to bring more abundant cash flow, which is estimated to be as high as tens of billions or even hundreds of billions. In particular, most of the mature processes have been depreciated, and the price increase has a greater effect on the gross profit margin.
Without confirming that Apple has agreed to set a price increase, the report states that as the largest foundry in the world, TSMC is more capable of making a favorable negotiation than the iPhone maker.
An unnamed senior executive in the domestic IC design industry pointed out that TSMC is the “most powerful” wafer foundry in the industry , and it is more capable of bargaining than Apple. For most IC design companies, “the boss (referring to TSMC) ) said it was going to go up, and it would be difficult for us to refuse.” At present, “no one of the IC design factories that received the price increase notice has refused.”
The Taiwanese foundry manufacturers the new A16 Bionic chips for iPhone 14 Pro and M2 chips for Macs built on an advanced 5nm process. It is reported that it provide Apple with A17 and M3 chips built on a 3nm process in 2024. As the only foundry in the world to offer mature processes, it seems unlikely for the Cupertino tech giant to let it go over price increase after two years.