Apple suppliers are warning of major price increases they have already had to implement, and more hikes are expected to come based on the market’s situation.
Apple supplier TSMC had to double its prices, more hikes to come
According to Japanese chemical supplier Showa Denko K.K., it had to raise its prices even further as it continues to deal with a “barrage of economic challenges confronting the $550 billion semiconductor industry.” Other Apple suppliers are likely to start doing the same.
According to a report from Bloomberg, the industry has already since “at least a dozen hikes already this year” because of COVID-19 affecting production in China and the war in Ukraine. The company’s CFO says that the issue is not going to ease until 2023.
Chief Financial Officer Hideki Somemiya told Bloomberg News in an interview. The situation is unlikely to significantly improve until at least 2023, he added.
Somemiya went on to say that the company “has been forced to drastically increase the cost it passes on to customers,” so, it has had to ask for “twice the amount” previously calculated for its customers.
A big theme this year common to all the players in the materials industry is how much cost burden we’d be able to convince customers to share with us. The current market moves require us to ask twice the amount we had previously calculated.
Showa Denko is one of TSMC’s suppliers and TSMC is responsible for manufacturing all Apple Silicon chips for iPhone. It will also provide chips for this year’s flagship iPhone 14 lineup. The price hike for TSMC will likely be passed onto Apple which means it could end up being passed on to consumers.
The Cupertino tech giant could very well increase the cost of its upcoming iPhone 14 lineup and other products to compensate for the high chip costs.
The standard iPhone 14 and iPhone 14 Max models of this year’s lineup are also expected to retain the A15 Bionic chip from last year’s iPhone 13 while the Pro models will be equipped with an A16 Bionic chip. This could also be explained by the ongoing issues affecting Apple’s supply chain.