Report: TSMC Raising Prices on Advanced and Legacy Processors
Image via TSMC
11 MAY 2022 - Interesting news around TSMC in a piece from the Japanese business site Nikkei. They’ve got a few sources saying that Apple’s processor partner and the world’s largest contract chip manufacturer plans a “modest” rate increase in early 2023. Six unnamed sources have the firm saying it’ll raise rates by “single-digit percentages” for “both mature and advanced chip production technologies…” Additionally, Nikkei has two unnamed sources saying “the price increases will be about 5% to 8% for different process technologies, from cutting-edge to legacy nodes…”
Assuming the report is correct, this is happening at a weird time. While 5% to 8% doesn’t sound like a tremendous amount, it comes on the heels of last year’s 20% price increases. The piece points out, it also comes:
…at a time when demand for smartphones and personal computers has slowed on market uncertainties sparked by inflation, the Ukraine war, and COVID-related lockdowns in China.
In other words, outside of TSMC, this might not look like the best time. The piece has one exec who’s heard word of the rising prices saying that:
…given the slowing demand for products like smartphones and PCs, it might be difficult for clients to fully accept TSMC's planned price hike. "For the advanced chips it might work, but for matured nodes, it could be quite challenging for customers to accept," the person said.
Okay. But there’s a shortage, so where are they gonna go? Also, inside TSMC, they might try to pitch it as short term pain for long term gain. Nikkei says secret insiders tell it that TSMC cites “looming inflation concerns, rising costs and its own massive expansion plans to help alleviate a global supply crunch” as reason for the rising prices. That last one’s no joke. The piece says TSMC “is spending $100 billion through 2023 to increase capacity, with $40 billion to $44 billion earmarked for this year alone.”
A piece from iMore on the planned price hikes addresses what it might mean for Apple. It’s a valid question, since TSMC makes the A-series chips that power iPhone and some iPads, as well as the M-series processors that power most Macs and the rest of the iPads. On the anticipated higher processor costs, iMore says:
Increasing prices for components across Apple's lineup could be bad news for consumers, with Apple likely facing a choice to either increase prices to offset such costs or absorb the losses in an already uncertain market.
One could easily see Apple doing either. It’ll be worth watching.
