Rising chip prices are expected to impact Apple

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In a new report, it has been indicated that chip and device prices are rising and could impact Apple and its chip maker, TSMC. According to Nikkei Asia, TSMC already charges over 20% more than other competitors for chips, and is reportedly preparing for its biggest price hike ever. This could significantly impact the price Apple pays for its chips and, therefore, impact the retail price of Apple devices.

These higher prices stem from a range of factors, including higher material and logistics costs as well as the race by device makers to secure adequate chip supplies, that have emerged since the chip shortage first began to bite late last year.

TSMC is also reportedly looking to stop customers from ordering more chips than they need in order to gain more production line space and secure more support from the supplier. Clients will need to negotiate specific terms of manufacturing before the price hike takes effect on October 1st. Although price hikes are likely from TSMC, Apple has so much power in the space that it will likely be able to negotiate a deal. But, even with this being true, TSMC is the only supplier of Apple’s A-series and M-series chips and could therefore gain more bargaining power.

As more clients are pushing for smaller fabrication in chips and more advanced technologies, chip prices are already high. Last month, DigiTimes reported that these new price hikes may take place sooner than expected, with the iPhone 13 lineup costing more than the iPhone 12 lineup. Even so, it is expected that the full impacts of increasing chip prices will not fully affect Apple until 2022.

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Published to Apple Scoop on 6th September, 2021.