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Apple Reportedly Agrees to TSMC Chip Price Hike After Refusing Last Week
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It's called how negotiation works. They may have gotten the price a bit lower than the original ask.
But of course, the customers will end up paying. Welcome to how every business on earth works.
A new state of the art fab costs around $20+ billion just to build. And then you need skilled employees and enormous demand to keep it going running 24/7. I suspect Apple's demand is nowhere near enough.
Or negotiate a lower price. . . .Took them a week to realize they have no alternative, at least in short term?
AAPL better get all the chips they can before China's economy collapses and baby xi invades Taiwan.
Where does it say they agreed to an amount in the middle? It seems like they are paying the “$20”.
You're assuming that. We have no idea what they agreed on, except that they came to an agreement above what Apple originally wanted to pay.
I feel like some people here do not know how negotiating works.
Well besides finding the engineers and techs with that specific skill set, the economies of scale are important. Does Apple have enough chip volume to make it financially viable? Generally fabs make chips for as many customers as they can but Apple doesn’t sell their chips.
Apple will build its own fabs by 2026
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.
Article Link: Apple Reportedly Agrees to TSMC Chip Price Hike After Refusing Last Week
They won't feel anything. We will feel it in the products that use those.Now you feel what we feel Apple
Obviously they don't have to pay employees more except fast food and other lower jobs.
They had a choice. Of course it would be a poor choice to not get parts, but it was a choice. Everyone has a choice for everything but death. They just don't want the consequences. You don't even need to pay taxes. You could go to prison
How do you figure that? The price a firm charges for goods and services has zero to do with how much they pay for materials and labor. So long as cost does not exceed revenue they will set the price to maximize profit, period. If they could charge more they would be doing it right now. If their cost goes up and consumers aren't willing to pay more then they'll have to dip into their ample profit margin or throw in the towell.
Gas is like the only thing lower here than when the spikes started. Groceries are already out of control, and I read they will be going up more.
Expect a huge bag of cash to drop at Global Foundries, Intel, and Samsung Foundries with written "please, improve".Took them a week to realize they have no alternative, at least in short term?
If they do, it won't be in the US. Apple seems to like India a lot recently and they have an excellent technical workforce. Apple builds nothing. Apple is just a design house.
Yep. Apple probably already planned a price hike (lets call it the usb-c tax) next year. So they dont care.
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Apple created this situation by giving / loaning big money to TSMC to buy the majority of ASML fabrication machines. The only ones in the world that cost hundreds of millions each & they only make a handful a year. They did this so TSMC could be first at 7, 5, 4 & soon 3nm. In return Apple became customer #1 and avoided the chip shortage as everyone else has had to wait after them for TSMC fabrication OR for ASML to make more machines for other fabricators.