Apple has reportedly rejected TSMC chip price hike

Posted:
in iPhone
A new report claims that Apple has rejected iPhone processor manufacturer TSMC's plan to raise its chip manufacture prices by around 6%.




The Taiwan Semiconductor Manufacturing Co was first rumored in August 2022 to be planning an increase, and then shortly afterwards it formally told its customers that the price rise would take place in 2023.

Now according to Economic Daily News, it is rumored that Apple has simply rejected the price increase. Apple is TSMC's largest customer, so it is likely that it would be able to have some influence.

However, TSMC has been slow to increase its prices compared to its rivals. Other processor manufacturers have been increasing chip production prices since late 2020, in part because of the global semiconductor shortage.

Economic Daily News sources further says that TSMC's planned rise is not high compared to those rivals. At the same time, TSMC's increase was intended to begin during 2023 when the global shortage is expected to ease.

Consequently, the publication's sources say that some customers had hoped that TSMC would be able to reduce its planned increase.

Neither Apple nor TSMC have commented on the claim that the rise has been rejected.

The planned TSMC rise was one reason why it had been believed Apple would increase the price of the iPhone 14 range, compared to the iPhone 13. Apple kept the iPhone 13 pricing for the US and China, but did raise it for most other markets, mostly because of foreign currency exchange complications.

Read on AppleInsider

Comments

  • Reply 1 of 11
    I suppose if you can get away with telling them "no", then tell them "no".

    Two questions I wonder about (and have no idea of the answers):

    1.  Who else can supply the type and volume of chips Apple needs without a major retooling effort?  Intel?

    2.  Who does TSMC have queuing up for chip fab to use up any capacity left unfulfilled by a departure or reduction by Apple?

    I would suspect the answers to at least one of those would give a clue as to who cries "uncle" first.
    netroxFileMakerFeller
  • Reply 2 of 11
    crowleycrowley Posts: 10,453member
    Risky, when we're still in the tailwind of a chip shortage.  I doubt TSMC will have trouble finding other customers, but there aren't many alternatives who can supply Apple at such scale and sophistication.
    grandact73FileMakerFellerdewme
  • Reply 3 of 11
    netroxnetrox Posts: 1,266member
    I am dubious. The inflation rate is more than 9%. The 6% hike is actually a good deal given the whole context. 
    FileMakerFellerwatto_cobra
  • Reply 4 of 11
    I suppose if you can get away with telling them "no", then tell them "no".

    Two questions I wonder about (and have no idea of the answers):

    1.  Who else can supply the type and volume of chips Apple needs without a major retooling effort?  Intel?

    2.  Who does TSMC have queuing up for chip fab to use up any capacity left unfulfilled by a departure or reduction by Apple?

    I would suspect the answers to at least one of those would give a clue as to who cries "uncle" first.
    Qualcomm was literally forced to choose inferior Samsung foundry for manufacturing Snapdragon 888 and 8 Gen 1 chips (their flagship SoCs) in the last 2 years due to inadequate capacity availability with TSMC. Qualcomm and Mediatek would be more than happy to pay for the capacity left over by Apple. Huawei too (for their Kirin SoCs), if not for international politics. And who knows, Intel might join the queue as well in the future if they are unable to fix their own foundry issues.
    FileMakerFeller
  • Reply 5 of 11
    netrox said:
    I am dubious. The inflation rate is more than 9%. The 6% hike is actually a good deal given the whole context. 
    9% is past. The 6% hike will be future.
    watto_cobra
  • Reply 6 of 11
    In addition to being TSMC's biggest customer, haven't Apple also heavily invested in them? I would think that would be enough of a reason for TSMC not to ask Apple specifically to adhere to a price hike.
    watto_cobra
  • Reply 7 of 11
    danoxdanox Posts: 1,345member
    I suppose if you can get away with telling them "no", then tell them "no".

    Two questions I wonder about (and have no idea of the answers):

    1.  Who else can supply the type and volume of chips Apple needs without a major retooling effort?  Intel?

    2.  Who does TSMC have queuing up for chip fab to use up any capacity left unfulfilled by a departure or reduction by Apple?

    I would suspect the answers to at least one of those would give a clue as to who cries "uncle" first.
    Qualcomm was literally forced to choose inferior Samsung foundry for manufacturing Snapdragon 888 and 8 Gen 1 chips (their flagship SoCs) in the last 2 years due to inadequate capacity availability with TSMC. Qualcomm and Mediatek would be more than happy to pay for the capacity left over by Apple. Huawei too (for their Kirin SoCs), if not for international politics. And who knows, Intel might join the queue as well in the future if they are unable to fix their own foundry issues.
    Sorry Intel canceled a slot at TSMC, their designs weren’t ready, Qualcomm is currently busy trying to get new chips designed (Nuvia acquisition) I doubt they are ready to go, all the others have to have something designed and ready to take advantage of the current process let alone the new process or what is the point of paying TSMC more.

    https://www.electronicsweekly.com/news/business/intel-cancels-n3-orders-tsmc-pares-back-n3-expansion-2022-08/  Intel out….

    Motorola, IBM, Samsung, Intel, and now TSMC, what’s Apple to do? Move on in time to something on shore? Might be good for local employment in five to 10 years. In the end the only company a company can depend on are those within when it comes to critical items/goals.

    Those wasted billions spent on content creation or sponsoring Jerry Jones become insignificant when things like this come up.
    edited September 28 muthuk_vanalingamFileMakerFellerdewme
  • Reply 8 of 11
    JinTech said:
    In addition to being TSMC's biggest customer, haven't Apple also heavily invested in them? I would think that would be enough of a reason for TSMC not to ask Apple specifically to adhere to a price hike.
    Apple tends to invest some or all of the capital costs required to build the manufacturing capacity they need. In return they pay a lower per-unit price with what are reportedly tiny profit margins for the component manufacturer. I don't know the details of the arrangement with TSMC but Apple's attitude in the negotiations is probably based on behaviour like this.

    I suspect Apple is saying that whatever agreement TSMC signed prohibits price increases outside a fixed schedule (and hey, look at what we did with the iPhone 14 series pricing). Apple may also have stipulated in the contract that any capacity they booked cannot be used to supply anyone else, regardless of any dispute raised.

    Describing Apple's negotiations as "hard ball" might be an understatement.
    mpantonebaconstangmuthuk_vanalingamJinTechwatto_cobra
  • Reply 9 of 11
    I'd heard that Intel booked a lot of 3nm capacity when it was due to come online - then cancelled their order.

    Didn't TSMC recently increase their prices - or is this a downplayed version of that original price increase?
    watto_cobra
  • Reply 10 of 11
    I wonder if Apple could get into chip fab business? 
    If anyone can afford to, it would be them, I think, right?

    I probably know too little about this stuff!
    watto_cobra
  • Reply 11 of 11
    I think a few people here are mistakenly conflating U.S inflation rates (which is hardly monolithic) with inflation effecting other currencies. 
    watto_cobra
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