Apple Products Could See 'Noticeable' Price Rises Amid Increased Chip Costs

Apple will need to pay more for the chips in its devices and may pass rising costs on to its customers, according to sources speaking to Nikkei Asia.

tsmc semiconductor chip inspection 678x452
TSMC, Apple's main chip supplier, is in the process of increasing its prices following wider inflation in the industry caused by the global chip supply shortage. The company's planned price rises are said to be the most substantial chip price hikes in a decade.

TSMC's chips were already around 20 percent more expensive than those from its direct rivals, but smaller foundries have ramped up their own prices due to higher material and logistics costs, and TSMC has committed to $100 billion in new investment over the next three years, motivating the company to increase its prices to maintain its premium and pass these added costs on to clients.

TSMC is reportedly also keen to stop its clients from ordering more chips than needed in the hope of securing production line space and additional support from contract chipmakers, which has made it difficult for the company to understand real demand. Clients will need to negotiate specific terms for manufacturing before the price rises officially take effect from October 1.

The company is still working through existing orders, meaning that the impact of the price rises will be felt much more acutely next year when production capacity has expanded and existing orders have been completed. Sources speaking to Nikkei said that chip developers such as Qualcomm will pass TSMC's price increases onto device makers such as Apple. TSMC also supplies Apple directly with the likes of the A14 and M1 chips.

The effect on retail prices for devices such as smartphones and computers is expected to be "noticeable." It is speculated that consumer electronics brands will increase the retail prices of their high-end models next year to offset the impact on mid-range and entry-level devices.

Chip prices are expected to remain high while clients push for smaller fabrication and more advanced chip production processes. Other sources said that the market should correct once demand falls since chipmakers will need to lower prices "to lure more clients and maintain utilization rates."

Late last month, DigiTimes reported that these price rises could hit sooner than expected, with the iPhone 13 lineup being more expensive due to increased chip costs. Even so, it appears that the effect of increased chip prices will not fully impact Apple until next year.

Tags: Nikkei, TSMC

Top Rated Comments

NARadyk Avatar
32 months ago
As if they don't already earn enough profit?
Score: 101 Votes (Like | Disagree)
iZac Avatar
32 months ago
Didn't this already happen last year with the $100 price hike on the 6.1" along with the removal of the earphones and charging brick?
Score: 51 Votes (Like | Disagree)
jz0309 Avatar
32 months ago

Another reason to Stick with Intel on Mac

Plus you get to run the NEW and AWESOME WINDOWS 11

Only 3.8GB in size compared to 12.5GB for macOS Monterey.
Just go buy a PC and be happy
Score: 45 Votes (Like | Disagree)
PJWilkin Avatar
32 months ago
Apple either absorbs the costs this year, or a lot of people will not be buying their kit during this years upgrade cycle

I’d like a new iPhone this year, but could easily wait a year if they jack up the prices
Score: 42 Votes (Like | Disagree)
GalileoSeven Avatar
32 months ago
Sounds like nothing more than a convenient cover to raise prices & enrich themselves even more
Score: 35 Votes (Like | Disagree)
arefbe Avatar
32 months ago
"may pass rising costs on to customers", seriously?
Score: 32 Votes (Like | Disagree)

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