Apple rejects TSMC’s up to 6% increase in price of chips made on advance process – Report

Apple’s long-term chips partner, Taiwanese Semiconductor Manufacturing Company (TSMC) plans to increase its silicon price by up to 6%. Economic Daily News reports that the manufacturer’s biggest client, Apple has rejected the price increase.

In 2021, the manufacturer notified its clients of an up to 20% increase in price in January 2022 but later pushed the date to 2023 with a drastic reduction in the price increase. Based on TSMC’s price hike, it was speculated that Apple might increase the prices of its products like the next-generation iPhones and Apple Silicon Macs.

TSMC- Apple

If the semiconductor demand weakens, TSMC might give up price increase for Apple

TSMC is the world’s leading chip foundry and through the global chip crisis that began in 2020, the foundry was able to supply the Cupertino tech giant chips for its products but now, it will increase its price depending on the process, starting from 3% to 6% for the mature process like Apple upcoming A17 chip built on 3nm process.

The COVID-19 epidemic in the past two or three years has prompted a huge increase in the market’s demand for semiconductors, and the foundry capacity has also been in short supply.

The global foundry leader TSMC will cancel the price discount of 2% to 3% for the first time in 2021.

The report mentions that TSMC’s price increase has been slower than its rivals in the past two years.

In 2022, it is rumored that the quotation will be increased, but ….TSMC’s cumulative increase is actually not high compared to other peers, and it can even be called “Buddha’s heart”. It’s just that TSMC’s price hike is relatively slow.

iSO 16 - iPhone 14 - apple

Having said that, the manufacturer is facing resistance for big clients like Apple because the semiconductor market has reversed, and “the clients hope that the company will share difficulties and make profits.”

Based on the current semiconductor demand, it is also speculated that if the demand further weakens in Q4 of 2022, the Taiwanese manufacturer might drop the price hike for large customers like Apple.

JPMorgan Chase research shows that although the demand and capacity utilization of major processes have declined, TSMC is still likely to maintain a 6% price increase for most processes next year.

However, if end demand (possibly from Apple and data centers) weakens further in the fourth quarter, TSMC may withdraw its decision to raise prices for large customers. Therefore, JPMorgan Chase expects TSMC’s chip average product price (ASP) in 2023 to not rise significantly.

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Addicted to social media and in love with iPhone, started blogging as a hobby. And now it's my passion for every day is a new learning experience. Hopefully, manufacturers will continue to use innovative solutions and we will keep on letting you know about them.

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