Chipmaker TSMC Reportedly Informs Apple of Further Price Hikes

[EM2013]

Just once I want to see price drops for something instead of price hikes

 

[falainber]

TSMC and Apple have contracts in place the pre-date these rumors by months/years, this is a nonsense rumor

Tell us about those contracts.

 

[retroneo]

Apple will probably start using Intel 18A as well as TSMC.

 

[jz0309]

Tell us about those contracts.

Apple is TSMC's #1 customer - you really think they do not have long-term supply agreements incl pricing in place?
Think again

 

[bobone]

Its nothing new, you just forgot about the reports of price increases in the past. In the 90s we used to track fires and flooding in SE Asia to anticipate RAM cost increases.

and in the 2000s we tracked those for hard drive prices.

 

[macbookj0e]

TSMC and Apple have contracts in place the pre-date these rumors by months/years, this is a nonsense rumor

They do but we don’t know what the terms are.

There could be something in there that allows TSMC to somehow increase prices.

 

[Leon Ze Professional]

This is why people should be rooting for Samsung, Intel, and other non-TSMC chip foundries to be successful. Both Samsung and Intel offer third party foundry services (though Intel has no notable external customers). If Intel were to again be competitive in manufacturing process with TSMC then Apple could pit Intel against TSMC pricing wise and threaten to have Intel start producing future generations of A, M, and other series chips. (And for the uninitiated this would not mean Apple going back to Intel's x86/x64 chips, it means Intel, or Samsung, would produce Apple's ARM chips on their own process nodes).

Competition is good!

Agree with what you're saying. But realistically, Samsung Foundry looks to be the only serious alternative out there with there 2nm GAA node architecture.

 

[Cuesca]

2nm is pretty crazy in and of itself, Francium (Fr) is 0.7nm in diameter. I wonder if I will be alive when we have subatomic processors.

 

[Unregistered 4U]

Apple will probably start using Intel 18A as well as TSMC.

TSMC being more expensive is still better than Intel not hitting power consumption/efficiency targets.

 

[Seoras]

You have to wonder what the cost per chip is for the low volume "Ultra" M series chips?
It's probably no wonder why Apple doesn't update this line very often.

 

[JPack]

Apple will probably start using Intel 18A as well as TSMC.

Maybe for stuff like N2 and U3 or chips that don't matter. But not for SoC.

 

[jz0309]

They do but we don’t know what the terms are.

There could be something in there that allows TSMC to somehow increase prices.

true, don't know any detail but also keep in mind that Apple is the supply chain expert ...

Apple and TSMC are partnering on process development, TSMC can't do that on their own so they are "9n bed" together so to speak, it is a mutual relationship and has been for many years now, you don't surprise your partner ...

 

[BruiserBear]

I know nothing about economics, but why are there so many more price increases for computer components nowadays, as opposed to decades ago?

At least part of the problem is the entire world and everything we use has these high tech chips in them. In simple terms the production of such chips has not expanded at the same pace the need for them has.

 

[I7guy]

[…]

TSMC apparently told customers, presumably including Apple, to expect pricing that is at least 50% higher than 3-nanometer processors. This was attributed to unusually high capital expenditure for the new node and to the lack of discounting strategies while yields are still in their early acceptable phase.

[…]

No sweat. Apple can afford to pay for the increase out of their pocket.

 

[Seoras]

TSMC and Apple have contracts in place the pre-date these rumors by months/years, this is a nonsense rumor

For known tech, yeah probably.
For new tech (smaller nanometer scale) it'll be too much of an unknown to be able to price it.
The article does say "unusually high capital expenditure for the new node".
Apple probably gets first refusal but can lock down the price for the volumes it knows it can ship.
Tomorrow's 2nm A/M chips will be the chip in your Apple TV in 7 years time.

 

[macbookj0e]

true, don't know any detail but also keep in mind that Apple is the supply chain expert ...

Apple and TSMC are partnering on process development, TSMC can't do that on their own so they are "9n bed" together so to speak, it is a mutual relationship and has been for many years now, you don't surprise your partner ...

Yeah you’re right. Would have liked to have been a fly on the wall to see how these discussions went down!

 

[jido]

The report further stated that suppliers expect flagship mobile chips built on the 2-nanometer process to carry unit prices around $280 once volume production begins. This would make it the most expensive component in the iPhone and dramatically affect Apple's profit margins, if the increase is not passed on to customers.

I suppose $280 is for the whole mobile device, not just the chip. That would be too big a jump!

I also suppose TSMC gets paid in dollars, so an increased price is to be expected with inflation.