Apple Reportedly Increasing iPhone 13 Prices to Compensate for Increased Chip Production Cost

Apple is reportedly planning to increase the price of the upcoming iPhone 13 series as a way to compensate for the increased costs of chip production from its leading chip supplier TSMC, according to a report from DigiTimes.

According to the report, TSMC is planning to increase the costs of its chip production, impacting several customers, including Apple. TSMC is reportedly looking to increase its costs by as much as 20% for its "advanced and mature process technologies." The new changes are expected to go into effect in January.

TSMC has reportedly notified customers of price increases by as much as 20% for its advanced and mature process technologies, with the new prices set to be effective starting January 2022. The price adjustments will also be for the orders scheduled to be fulfilled starting December.

For TSMC's advanced sub-7nm process technologies, quotes will rise by 3-10%, the sources indicated. Apple, the biggest client of TSMC with its orders accounting for over 20% of the foundry's total wafer revenue, will experience a 3-5% price hike, the sources said.

As a way to compensate for the increase of the costs, Apple is reportedly eyeing to increase the costs of the upcoming iPhone 13 series to "mitigate the impact of rising costs on their profitability."

While facing rising production costs, brand vendors may end up passing the costs onto end-market customers, the observers said.

Apple is likely to set higher prices for its upcoming iPhone and other series, according to market sources. Multiple notebook brand vendors, which have raised their prices by 5-10% so far this year, continue to explore ways to mitigate the impact of rising costs on their profitability.

Apple this year is preparing some considerable improvements for the iPhone 13, including features specifically designed for professional photographers and videographers. On the higher-end models of the upcoming lineup, Apple is rumored to be adding support for ProRes for videos and portrait mode videos. Apple may see both of these features as justification for an increase in price on its most premium iPhones.

Apple is expected to hold an all-digital event which will include the announcement of the iPhone 13 and Apple Watch Series 7 in just a few weeks. To catch up on everything we know about the upcoming iPhones, be sure to check out our comprehnsive guide.