Apple reluctantly agrees to TSMC's price increases

AlphaX

Posts: 54   +16
Staff
In context: TSMC is one of the largest processor manufacturers in the world, creating chips and wafers for many companies, including AMD, Nvidia, and Apple. As one of TSMC's biggest customers, Apple was not happy following an announcement that TSMC would increase prices in 2023.

Recently, TSMC has seen a high level of demand due to many of its customers launching new product lines. Nvidia's RTX 40-series graphics cards hit stores on October 12, and AMD recently released its Zen 4 processors, with RDNA 3 graphics cards soon to follow.

While AMD and Nvidia are big names to tech enthusiasts, neither company compares to Apple regarding TSMC's bottom line.

In December 2021, DigiTimes noted that Apple accounted for over 25 percent of TSMC's total sales. These numbers are no surprise since the tech titan sells hundreds of millions of products annually, according to Business of Apps. Nearly all Apple devices use processors supplied by TSMC, showing that it relies heavily on the fabricator. The iPhone 15 is slated to pack a 3nm A17 Bionic chip from the Taiwanese manufacturer.

Recently, TSMC announced that starting in 2023, it would institute a six-percent price increase to purchase processing wafers. The company's executives claim that inflation has increased the cost of labor, electricity, and raw materials used to produce wafers. They also note that fab plants are expanding production capabilities and that these higher prices will help TSMC in the long term.

While numerous companies that rely on TSMC wafers were quick to accept the price increases, Apple was initially hesitant to agree to such changes. However, TSMC wiped their brows in relief on Monday when UDN reported that Apple had officially agreed to the price bump. Nvidia closely monitored the situation, believing that if Apple could negotiate a lower price, it might be able to do the same.

Overall, some insiders believe these price hikes are reasonable, stating that inflation and the cost of raw materials warrant the changes. The demand for microprocessors has also seen a boom in recent months, furthering TSMC's reasoning for the increase as it hopes to capitalize on the market.

Permalink to story.

 

winjer

Posts: 479   +2,189
Taiwan has a 2.6% inflation rate. Yet TSMC claims this is the reason for waffer price increases, on top of all the increasing done in the last 2 years.
This is just exploitation and greed.

 

WhiteLeaff

Posts: 55   +66
Taiwan has a 2.6% inflation rate. Yet TSMC claims this is the reason for waffer price increases, on top of all the increasing done in the last 2 years.
This is just exploitation and greed.

You say because you don't know the cost involved in these advanced manufacturing processes, the trend is actually getting much more expensive.
 

Lounds

Posts: 1,211   +1,119
I give it 10 years and Apple will have their own fab. The hate having to do business with other companies.
 

umbala

Posts: 774   +1,494
"Apple was initially hesitant to agree to such changes." Really? Are you as shocked as I am?
 

umbala

Posts: 774   +1,494
This is just exploitation and greed.
Nobody's forcing any company to buy their chips from TSMC. They're free to go elsewhere, same as nVidia did when they went to Samsung for their last generation GPUs because they were not happy with how much TSMC wanted to charge them. Or they're welcome to go and try to get a better deal from Intel (fat chance).

If anyone is greedy in this equation it's Apple and not TSMC. If TSMC's prices are so unreasonable and exploitative then how is Apple still posting record profits every quarter?
 

HafizNafes89

Posts: 68   +41
Nobody's forcing any company to buy their chips from TSMC. They're free to go elsewhere, same as nVidia did when they went to Samsung for their last generation GPUs because they were not happy with how much TSMC wanted to charge them. Or they're welcome to go and try to get a better deal from Intel (fat chance).

If anyone is greedy in this equation it's Apple and not TSMC. If TSMC's prices are so unreasonable and exploitative then how is Apple still posting record profits every quarter?
Yeah but Nvidia came back crawling. Samsung's been having quality issues with their chips. They are behind in performance compared to TSMC!
 

shark975

Posts: 98   +118
. tsmc can tell apple to kick rocks, apple has nowehere else to go. apple cowered and begged not to raise it more my sources tell me. tsmc said ok, for now...
 

winjer

Posts: 479   +2,189
You say because you don't know the cost involved in these advanced manufacturing processes, the trend is actually getting much more expensive.

TSMC increase prices on all process nodes, even older ones.
Now that the market is normalizing, prices should go down. As they did for NAND and memory chips.
 

kiwigraeme

Posts: 1,302   +951
The thing you learn at this level it's cut throat - Why shouldn't TSMC charge Apple more - do you think Apple is loyal? - remember the big Apple/Samsung fight - doesn't stop Apple buying super bright oled rgb screens from Samsung .
Never trust a corporation they only answer to their share holders who want the highest share price/dividend . I definitely would not trust Apple to stay with me just because I give them sweet deals .

Anyway apparently we will be overflowing with Fabs in a few years .

TSMC has to back themselves - why not should be dominant for another 3 years at least .

Remember it's not just the price - It's the VIP package and secrecy. I sure the engineers from Apple working with TSMC will be annoyed to change to Intel or Samsung randomly to save a few bucks.

Lots of us won't change our banks , guy changing our gas bottles for a few dollars if we like the service or the people we deal with.
 

ZedRM

Posts: 1,337   +934
Apple reluctantly agrees to TSMC's price increases
Put another way, Apple had no choice.

The negotiations were short
Yeah, and those negotiations went something along the lines of;
TSMC: "We're increasing our prices."
Apple: "We don't like this."
TSMC: "Ok, go somewhere else. We have plenty of customers to replace your volume without skipping a beat."
Apple: "Ok, we'll pay."
TSMC: "Good. Have a nice day ma'am."
 
Last edited:

Kn0xx

Posts: 13   +12
Is it me, or Apple products are loosing the interest year after year.... releasing Iphones every year is a step up in inovation ?... milking apple fans ... I guess.
 

MSIGamer

Posts: 84   +101
Put another way, Apple had no choice.


Yeah, and those negotiations went something along the lines of;
TSMC: "We're increasing our prices."
Apple: "We don't like this."
TSMC: "Ok, go somewhere else. We have plenty of customers to replace your volume without skipping a beat."
Apple: "Ok, we'll pay."
TSMC: "Good. Have a nice day ma'am."

Get ready for your $2400 iPhone next year.
 

TazR6

Posts: 7   +3
Taiwan has a 2.6% inflation rate. Yet TSMC claims this is the reason for waffer price increases, on top of all the increasing done in the last 2 years.
This is just exploitation and greed.
Yet crApple continues to make bigger and bigger profits each quarter. Is that not "exploitation and greed"?
For clarity, what is a waffer (even my autocrrect caught it out lol)? If you mean what the story is about, it says right up there. Wafer my friend, wafer.
 

winjer

Posts: 479   +2,189
Yet crApple continues to make bigger and bigger profits each quarter. Is that not "exploitation and greed"?
For clarity, what is a waffer (even my autocrrect caught it out lol)? If you mean what the story is about, it says right up there. Wafer my friend, wafer.

I don't give a f*** about Apple.
What I care is that all CPUs and GPUs are going to increase prices, because every company caved to TSMC.