Apple Silicon Supply Chain Faces Further Price Hikes

Apple is likely to face further increased chip prices as supplier TSMC contends with additional increased costs, Bloomberg reports.

Japanese chemicals firm Showa Denko K.K. supplies vital chip fabrication materials to TSMC and is now being forced to drastically increase prices on the back of the global chip shortage. Other component makers and material suppliers are making similar moves in the semiconductor industry amid a wider price squeeze.

Showa Denko Chief Financial Officer Hideki Somemiya said "A big theme this year common to all the players in the materials industry is how much cost burden we'd be able to convince customers to share with us. The current market moves require us to ask twice the amount we had previously calculated."

As a key supplier early in the production chain, Showa Denko's price hikes are expected to tighten margins and pressure clients like TSMC to pass on increased costs to their own customers, including Apple. The situation is unlikely to significantly improve until at least 2023, Somemiya told Bloomberg.

In May, Bloomberg reported that TSMC was in the process of warning its customers of a considerable price increase. This came after a hefty 20 percent price hike in 2021, which was said to be the most substantial chip price rise in a decade.

Last year, Nikkei Asia warned that Apple could be forced to pass the increased price of chips onto customers. Apple's flagship iPhone models with 64GB of storage have been priced at $999 since the launch of the iPhone X in 2017 and further price rises have yet to hit the iPhone lineup. This year's iPhone 14 and iPhone 14 Max devices are widely expected to retain the same A15 Bionic chip from the iPhone 13 lineup, which may be explained by the ongoing supply chain pressures behind Apple's chips.