Apple’s silicon supply chain faces price hikes

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As supplier TSMC deals with extra rising costs, Bloomberg says that Apple will likely see more raised chip pricing.

Showa Denko K.K., a Japanese chemical company that provides TSMC with essential materials for chip manufacture, has been forced to dramatically raise prices as a result of the global chip shortage. In response to a wider pricing squeeze, other component manufacturers and material suppliers are acting similarly in the semiconductor business.

Hideki Somemiya, the chief financial officer of Showa Denko, said “How much of the cost burden we’d be able to persuade consumers to share with us is a major subject this year shared by all the players in the materials sector. Due to the current market conditions, we must need two times as much as we originally estimated.”

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Showa Denko’s pricing increases are anticipated to squeeze profits and put pressure on customers like TSMC to pass along additional costs to their own clients, including Apple, as they are a crucial supplier early in the production chain. According to Somemiya, the situation is not going to dramatically improve until at least 2023.

Bloomberg stated in May that TSMC was preparing to notify its customers of a substantial price rise. This comes after a large 20 percent price increase in 2021 that was reportedly the biggest chip price increase in ten years.

Nikkei Asia issued a warning about Apple’s potential need to charge customers more for chips last year. Since the release of the iPhone X in 2017, Apple’s flagship 64GB iPhone models have been priced at $999, and the iPhone lineup has not yet seen any additional price increases. The A15 Bionic technology from the iPhone 13 series is anticipated to remain in the iPhone 14 and iPhone 14 Max smartphones this year.

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