Apple Reportedly Agrees to TSMC Chip Price Hike After Refusing Last Week

After refusing a price hike last week from its primary chip supplier, TSMC, Apple has apparently reversed course and accepted the increase in prices set to be applied next year, according to the latest report from Economic Daily News.

From January 1, 2023, TSMC plans to raise the price of 8-inch chip wafers by 6 percent, while 12-inch wafers are set to increase by 3 to 5 percent. Economic Daily News previously reported that Apple wouldn’t accept the price increase, but it is now saying the company has agreed to bear the cost.

TSMC’s fabrication materials suppliers have been 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.

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, it was speculated that Apple may have to raise device prices to account for substantial chip price rises.

TSMC produces A-series chips for the iPhone, iPad, and Apple silicon chips for the Mac. The foundry is expected to begin production of 3nm chips for Apple by the end of 2022. Apple’s first 3nm chip may be the M2 Pro chip for Macs, while the A17 Bionic chip in next year’s iPhone 15 Pro models is also expected to be a 3nm chip.

Apple’s transition to 3nm chips will result in further improved performance and power efficiency in upcoming Macs and iPhones, as Apple seeks to preserve its performance-per-watt lead over competitors like Intel, even if that means paying higher prices and potentially passing on the cost to consumers.