TSMC is the world’s largest chipmaker, responsible for the CPUs used by Apple, AMD, Nvidia, Qualcomm, and even certain Intel products. And, according to a new story from The Wall Street Journal, its products are set to get a lot more expensive: the business wants to boost pricing on sophisticated processors by roughly 10% and less advanced chips by around 20%.
The good news is that the higher pricing may actually help TSMC alleviate some of its supply challenges by lowering demand, which has been driving part scarcity. It will also assist TSMC in continuing to obtain funds for its ambitious capacity expansion plans, which include investing $100 billion by 2023 on projects such as its $12 billion production hub in Arizona and others. In its most recent quarterly results report, TSMC predicted that shortages would likely last until 2022.
TSMC Price Hike: Will Gadgets Pricing Further Increase?
Because chips are still scarce, semiconductor supply has become an increasingly important factor for major tech and automotive companies. Beyond the bill of materials, many other factors influence the pricing of phones, laptops, and gaming consoles, thus a 10% to 20% increase in processor and SOC costs may not always translate to a corresponding price increase for customers.
However, increasing the price of what was already one of the most significant and expensive components in a smartphone (for example, the Qualcomm modem and A14 SOC are two of the iPhone 12’s three most expensive parts) might lead to price rises on some of the world’s most popular gadgets.
The Wall Street Journal’s story does not say if Apple will be affected by TSMC’s pricing hikes or whether it will opt to pass those costs on to customers if chip prices rise. However, TSMC is the world’s only supplier capable of producing chips at the advanced level and volume required by Apple for its A-series and M-series chips used in iPhones, Macs, and iPads.
Furthermore, Apple CEO Tim Cook warned during the company’s most recent earnings call those silicon supply constraints may affect the company’s planned iPhone and iPad products this autumn, particularly for older, less sophisticated chips.
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