Apple Reportedly Refuses to Accept TSMC Chip Price Hike
Apple has reportedly refused to accept a price increase from its sole chip supplier, TSMC, according to Economic Daily News.
The report claims that Apple, the largest customer of TSMC, has rejected the supplier's plans to increase chip prices next year. TSMC has been planning to increase its prices by six to nine percent, depending on the fabrication process.
TSMC's chips were already around 20 percent more expensive compared to those from its direct rivals, but smaller foundries have ramped up their own prices in recent years 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 added costs on to clients.
TSMC was also reportedly keen to stop its clients from canceling orders and 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.
Following negotiations, Apple has apparently refused to accept further price increases. TSMC makes all of Apple's custom silicon chips, but Apple is estimated to make up more than one quarter of TSMC's entire revenue, meaning that the companies are fairly reliant upon each other. An improvement in the semiconductor industry's supply outlook despite inflation is believed to have hardened Apple's refusal to acquiesce to price hikes.
Like many of Apple's suppliers, TSMC has been wrestling with supply chain issues since 2020. Last year, it was speculated that Apple may have to raise device prices to account for substantial chip price rises.
Top Rated Comments
If inflation is an enemy to all, the best way to quickly wrangle it is for people as a group to decide the money is worth more than the new stuff they want to buy. Stop "just paying" and prices will soon start coming down trying to find a level when consumers will once again trade money for stuff. The harder the crowd clings to their dollars, the faster and greater prices would come down.
If Apple is your hero/God/example, do as Apple does: refuse to pay higher prices.
The vast majority of things money buys is not needed, just wanted. Focus on absolute needs for a while and the want stuff will be buyable for less.
It's just another one of those realities of running a business. It's not sexy, but it's still has to be done at the end of the day, and it needs to be done well.