TSMC is the largest chip maker in the world and the company responsible for the processors used by Apple, AMD, Nvidia, Qualcomm and even some Intel products. And its products are about to get a lot more expensive: The company plans to raise the prices of its high-end chips by about 10 percent and less-advanced products by about 20 percent, according to one new report from The Wall Street Journal.
The supply of semiconductors has become an increasingly important factor for large technology and automotive companies as chips remain difficult to obtain. There are many factors that push the prices of phones, laptops, and game consoles beyond the actual bill of materials, so a 10 to 20 percent increase in processor and SOC costs may not necessarily correlate with a similar price increase for consumers.
But raising the prices of what was already one of the most important and expensive components in a device (e.g. two of the iPhone 12’s three most expensive parts his Qualcomm modem and A14 SOC) means we could be on our way to price increases on some of the most popular devices in the world.
The Wall Street JournalThe report does not specify whether Apple will be affected by TSMC’s price increases or whether it will choose to pass those additional costs on to customers if it sees higher chip prices. But TSMC is literally the only supplier in the world capable of making chips at the advanced level and volume that Apple needs to make its A-Series and M-Series chips for its iPhones, Macs and iPads.
In addition, Apple CEO Tim Cook warned in the company’s latest earnings call that silicon supply restrictions may come to upcoming iPhone and iPad products this fall, especially for older, less advanced chips.
The good news is that the increased prices may help alleviate some of the supply problems for TSMC by reducing some of the demand that has caused the scarcity in parts. It will also help TSMC raise money it needs for its ambitious investments in capacity expansion, including spending $100 billion through 2023 on plans such as its $12 billion manufacturing hub in Arizona and other projects. TSMC had previously warned that deficits would likely extend into 2022 in its latest quarterly report.