Apple, Nvidia and AMD suppliers prepare to increase prices again

Taiwan Semiconductor Manufacturing Corporation (TSMC), the chip maker that supplies silicon to some of the world’s biggest technology companies, is said to be preparing to raise its prices again.

As reported by iMore and Nikkei Asia, it appears that the 20% price increase it applied to its products in 2021 is not enough to offset the effects that the pandemic has had on its overall operations.

Naromon Poonketwanchai / Getty Images

According to Nikkei Asia, which has good sources in the technology industry, TSMC appears to have informed its customers that the cost associated with its silicon will become more expensive from 2023 onwards.

TSMC is said to attribute the price hike to “looming inflation concerns, rising costs and its massive expansion plans to help alleviate the global supply crunch.” Constrained supply chains have been a constant topic for the past couple of years.

iMore highlights how TSMC customers, including the likes of Apple, Intel, Nvidia, and AMD, are already paying higher rates due to the massive 20% increase achieved in 2021.

Elsewhere, at the start of 2022, a DigiTimes report indicated that prices for TSMC’s processors would grow “significantly” in 2022 due to rising foundry costs.

These prices will now be subject to another increase in the 5% to 8% range. Although the changes should come to fruition during 2023, the reason for the relatively early announcement is “to give customers some buffer to prepare for price adjustments, while TSMC’s move to raise prices is to address the increased costs and capital needs of historical expansions.”

As for the expansion mentioned in the report, TSMC is reported to be preparing to spend up to $44 billion towards expanding its chip manufacturing capacity through 2022 alone. The figure is part of a larger $100 billion investment strategy aimed at cementing its position as one of the world’s most valuable technology companies.

Taiwan Semiconductor
Taiwan Semiconductor Corporation (TSMC), Fab 5 Building, Hsinchu Science Park, Taiwan Belden / Wikimedia

The technology industry’s growing dependence on TSMC

So, who is TSMC? The company provides chipsets that power some of the world’s most famous devices. Apple is its most important customer to date.

iMore notes that TSMC is producing the required A-series chipsets for products like the iPhone 13 and iPhone SE.

On top of that, Apple is outsourcing silicon manufacturing to TSMC for chips like the M1 Pro and M1 Max found in some of the company’s latest devices, including the 2021 MacBook Pro and Mac Studio.

While we’ve recently seen price drops across the board for GPUs in particular, of course, whenever a tech company gets hit by higher costs for its parts, the bottom line usually culminates in customers paying for the teams rather than the company taking the money. success.

Get ready for GPUs, CPUs, iPhones, and more

It’s not just the more expensive iPhones and Macs that will likely become the new standard, at least for a year or so once 2023 arrives; Nvidia and AMD also rely on TSMC for their chips needed for their next generation GPUs.

Team Green has reportedly already paid $10 billion to TSMC for its 5nm silicon order, while AMD is expected to allocate $6.5 billion this year to chip suppliers, including TSMC.

In any case, as technology developed and became more and more popular, TSMC achieved record success in terms of its bottom line.

Most recently, April saw record revenue with sales of $5.81 billion, which is a massive 55% jump over 2021.

Even throughout 2021, TSMC saw six consecutive quarters of record sales. For example, in December, it recorded the highest amount of revenue for a single month at the time by generating about $5.6 billion.

It’s clear that leading tech companies rely on TSMC’s silicon more than ever before, and by all accounts, this will continue to move forward.

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