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TSMC: Apple agrees to the price hike from 2023

According to reports from Taiwan’s business-oriented media, Apple has agreed to TSMC’s demands for a price hike for 2023, but as with all unofficial news, don’t believe everything you read. The Economic Daily (UDN) reported last week that some TSMC customers had reportedly received warnings of the proposed price rises, but that Apple had said it would reject any increases. Nvidia was claimed to be keenly monitoring TSMC for any indication that it would be willing to compromise. According to a current rumour from the same source, Apple will pay TSMC the required additional sum for its services in the upcoming year.

The reports state that TSMC plans to increase the price of 8-inch wafer production by 6% and that of 12-inch wafers by between 3% and 5%. According to UDN, it is aware of various sources who have verified the spectrum of price hikes for foundries. Apple is a key client of TSMC, reportedly contributing to about 25% of its revenue. This doesn’t seem to have given Cupertino much influence over TSMC, though, since the story from today claims that the foundry will not budge on its demands for a price rise.

According to reports, Nvidia has been keeping an eye out for indications that TSMC will negotiate.

TSMC
credit: tomshardware

However, with Apple seemingly caving in to the requests for a price hike, there is little optimism that Nvidia will be able to reduce its prices by applying pressure to TSMC.

The “secret” to TSMC’s unbeatable negotiating stance is the size of its clientele. Consumer downturns have severely affected the business, most notably in the market for consumer goods dependent on semiconductors, such as graphics cards, cellphones, and storage devices. However, some of TSMC’s clients are still benefiting from a robust demand wave in H2 2022 and seem optimistic about the upcoming year. UDN singles out the automotive, data centre, and HPC technology sectors for their enduringly strong demand.

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Last but not least, UDN offers a story about how TSMC’s reputation for “reasonable” behaviour has mellowed opposition to its requests for price hikes in the wake of a global slump. Evidently, during prior boom times, TSMC only requested “moderate” pricing increases. Insiders therefore consider the present 5% or so hikes to be realistic, especially in light of rising inflation and fluctuating raw material costs in the majority of locations.

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Nivedita Bangari
Nivedita Bangari
I am a software engineer by profession and technology is my love, learning and playing with new technologies is my passion.
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