TSMC is raising chip prices by 20 per cent - unless you're Apple
Big customers make big savings
Last month, we covered the news that chip giant TSMC was set to raise chip prices by as much as 20 per cent, to fund future capacity expansion in the face of the global shortage.
While the news came as a shock to most TSMC customers, it appears that the company's main client, Apple, has less to worry about.
According to semiconductor analyst Lu Xingzhi, TSMC has decided to increase the price of the A15 Bionic SoC, which it produces for Apple, by just three per cent.
TSMC's special treatment for Apple is not surprising, considering how important the company is as a customer: Apple's orders account for more than 20 per cent of TSMC's revenue.
The Cupertino-based firm has ordered over 100 million A15 Bionic chips from TSMC, according to sources, to ensure the iPhone 13 doesn't face the same availability issues plaguing so many products these days.
As for Apple, it will have to decide over the coming months whether it wants to keep its profit margins the same by increasing the price of the 2021 iPhone models, or if it is ready to absorb the rise itself to keep the price of upcoming iPhone models at the same level as planned.
TSMC - the world's largest chipmaker - controls over half the global foundry market, making chips for the likes of Apple, Qualcomm, Nvidia, AMD, and even Intel.
Industry analysts believe the price hike will help TSMC raise the money it needs for ambitious investments in expanding capacity, as it struggles to deal with the ongoing chip shortage.
The firm has said that it plans to spend about $100 billion in capital investments through 2023, including $12 billion on a new manufacturing hub in Arizona. The company is also considering opening its first Japanese chip plant, in Kumamoto.
The hike in chip price will not be limited to TSMC only however.
According to TheElec, Samsung and Key Foundry are also planning to raise prices by 15 to 20 per cent in the second half of the year, and have notified customers.
Major players like Qualcomm, Nvidia and others use Samsung process nodes for some of their products.
Another Taiwan-based foundry, UMC, has already increased its prices by 30 per cent twice this year alone.
Taiwan's PSMC, China's biggest semiconductor maker SMIC, and US giant GlobalFoundries have also increased their prices in recent months.
The global semiconductor shortage has affected many industries, including smartphone and car makers, since the start of the pandemic.
Toyota, the world's largest automaker by sales volumes, said last month that it would slash global production for September 2021 by 40 per cent, due to the shortage. General Motors, Nissan, Ford, Honda and Jaguar Land Rover have all also slowed or temporarily stopped production at some plants this year.
Chip-makers have warned that the supply chain disruption could continue till 2023.