Apple Reportedly Refuses to Accept TSMC Chip Price Hike

[MacRumors]

Apple has reportedly refused to accept a price increase from its sole chip supplier, TSMC, according to Economic Daily News.

The report claims that Apple, the largest customer of TSMC, has rejected the supplier's plans to increase chip prices next year. TSMC has been planning to increase its prices by six to nine percent, depending on the fabrication process.

TSMC's chips were already around 20 percent more expensive compared to those from its direct rivals, but smaller foundries have ramped up their own prices in recent years due to higher material and logistics costs, and TSMC has committed to $100 billion in new investment over the next three years, motivating the company to increase its prices to maintain its premium and pass added costs on to clients.

TSMC was also reportedly keen to stop its clients from canceling orders and ordering more chips than needed in the hope of securing production line space and additional support from contract chipmakers, which has made it difficult for the company to understand real demand.

Following negotiations, Apple has apparently refused to accept further price increases. TSMC makes all of Apple's custom silicon chips, but Apple is estimated to make up more than one quarter of TSMC's entire revenue, meaning that the companies are fairly reliant upon each other. An improvement in the semiconductor industry's supply outlook despite inflation is believed to have hardened Apple's refusal to acquiesce to price hikes.

Like many of Apple's suppliers, TSMC has been wrestling with supply chain issues since 2020. Last year, it was speculated that Apple may have to raise device prices to account for substantial chip price rises.

Article Link: Apple Reportedly Refuses to Accept TSMC Chip Price Hike

 

[blazerunner]

But Apple is ok with price hikes for their own consumers.

 

[jonnysods]

Man if only I could do that at the pump or grocery store.

 

[RalfTheDog]

With the political situation, it would not be a bad idea for Apple to have other sources.

 

[vertsix]

Apple is going to have to cave in here, as TSMC has the most advanced node. Samsung's fabs are no where near what Apple needs.

 

[senttoschool]

Great, Apple can get their chips from Samsung or Intel.

Or this is just a clickbait article with a sensational headline?

 

[RalfTheDog]

Man if only I could do that at the pump or grocery store.

You can always choose to consume less.

 

[Abazigal]

But Apple is ok with price hikes for their own consumers.

The two are not mutually exclusive. You raise prices because products either cost more to make, or in this case, to account for currency fluctuation. At the same time, you do your best to manage costs at the component level.

It's just another one of those realities of running a business. It's not sexy, but it's still has to be done at the end of the day, and it needs to be done well.

 

[RalfTheDog]

The two are not mutually exclusive. You raise prices because products either cost more to make, or in this case, to account for currency fluctuation. At the same time, you do your best to manage costs at the component level.

It's just another one of those realities of running a business. It's not sexy, but it's still has to be done at the end of the day, and it needs to be done well.

We try to keep our prices low, but we have found that when we raise them, our consumers think we are a better value and our sales go up. It's a very strange world.

 

[HobeSoundDarryl]

Imagine if consumers as a group decided that price hikes were unacceptable and "just said no" instead of rolling over and "just paying up"- even scrambling to "be first" at doing so- with some slinging how they are "forced" to pay more.

If inflation is an enemy to all, the best way to quickly wrangle it is for people as a group to decide the money is worth more than the new stuff they want to buy. Stop "just paying" and prices will soon start coming down trying to find a level when consumers will once again trade money for stuff. The harder the crowd clings to their dollars, the faster and greater prices would come down.

If Apple is your hero/God/example, do as Apple does: refuse to pay higher prices.

The vast majority of things money buys is not needed, just wanted. Focus on absolute needs for a while and the want stuff will be buyable for less.

 

[MayaUser]

Great, Apple can get their chips from Samsung or Intel.

Or this is just a clickbait article with a sensational headline?

not a chance that those 2 can deliver what TSMC is

 

[MayaUser]

With the political situation, it would not be a bad idea for Apple to have other sources.

i bet they can have other sources..but not at this level of quality/quantity/research

 

[ssledoux]

You can always choose to consume less.

Sure would be awesome if people didn’t have to purchase gas to drive to work, and food to, oh IDK, LIVE.

 

[Bytor65]

They need each other, but I would argue TSMC is in the drivers seat for calling Apples Bluff. Samsung node is way behind, and it's dubious Samsung could even deliver Apple Volumes if they tried to separate from TSMC.

 

[6787872]

But Apple is ok with price hikes for their own consumers.

if only the customers would refuse to accept them

 

[RalfTheDog]

Sure would be awesome if people didn’t have to purchase gas to drive to work, and food to, oh IDK, LIVE.

People can choose to eat less and to drive less when not going to work. (My company went to 100% work from home at the very beginning of the virus so, I am probably not as sympathetic as I should be.)

 

[blazerunner]

if only the customers would refuse to accept them

You don't get to refuse anymore.

 

[ssledoux]

People can choose to eat less and to drive less when not going to work. (My company went to 100% work from home at the very beginning of the virus so, I am probably not as sympathetic as I should be.)

Sure people can choose to eat less, but at some point you still have to eat, and not everyone has the luxury of not driving to work. My husband never leaves the house in his vehicle unless he’s going to work - he’s a homebody like that. His gas bill is still $400+ per month, and that’s with prices down $1/gallon from a few months ago.

 

[Radeon85]

How can they even refuse, surely they would tell them to get lost if they won't pay up. Plenty of others customers out there.

 

[RalfTheDog]

if only the customers would refuse to accept them

When your costs go up, there comes a point when you have no choice but to raise your own prices. You can't sell your product for a loss, then make up the difference in volume.

 

[applicious84]

You can always choose to consume less.

Some people could, but seeing this post without knowing the situation sounds really privileged. You could always post less.

 

[blazerunner]

People can choose to eat less and to drive less when not going to work. (My company went to 100% work from home at the very beginning of the virus so, I am probably not as sympathetic as I should be.)

I've got the privilege of working for a Canadian insurance company based out of Cambridge. They forced me back into the office. No compromise either. Most days are without meetings. Many meetings are virtual anyway. Total waste of time, energy, resources, etc. The best is when I see the VPs sitting in their office... having virtual meetings. This company is ridiculous.

 

[HobeSoundDarryl]

Sure would be awesome if people didn’t have to purchase gas to drive to work, and food to, oh IDK, LIVE.

Seek WFH days from the employer. Carpool. Bus or other transportation. Start a little garden to grow some free food. If possible, assemble a small chicken coop for free eggs. Barter for essentials from local markets/farmers. Step back as little as 2 generations and much of the "need to live" stuff could be had for as little as near free. How? They made it themselves, grew it themselves, or bartered to bypass exchange of cash and for-profit middlemen with their own sizable markups.

Else, it's easy to make excuses to keep paying any price for gas, any price for food, etc. Or, "think different" and see what you can do to reduce such costs.

Sure, for some people, there are no such options. But it would only take a large crowd who COULD do it to put price pressures on essentials, benefiting themselves and those with circumstances that make such options difficult-to-impossible. Else, as we rationalize just paying more, we reward sellers for charging more.

The task of sellers is to optimize pricing to make as much profit as possible. The task of buyers is to get maximum value for the hard-earned money exchanged for stuff. Buyers seem to have forgotten that they actually have the greater power. And if they would flex that power as a group, sellers will bend because they need the revenue much more than buyers tend to need the non-essential stuff most sellers sell. As it is now, consumers seem to not value their money enough to flex that power... unless/until they find themselves "forced" into it.

 

[MrENGLISH]

I thought Apple owned a percentage of TSMC??? Maybe that gives them some say in the matter. If not, maybe it is time for Apple buy them out.

 

[840quadra]

Are those actually price hikes, or, normal % changes for inflation and currency fluctuations these days?

I know Apple wants to own the world, but they also want to be paid fair market (ok sometimes more) for their products, so why can't they pay their share to suppliers?