Apple chip partner TSMC to increase price of production by up to 20%

Apple’s chip manufacturing partner Taiwan Semiconductor Manufacturing Company (TSMC) has reportedly increased the price of all processes. It is unclear if the increased production price of chips could result in slightly more expensive end-result products. 

The Taiwanese chip manufacturer is responsible for producing the A-series and M-series for Apple. It also makes chips for another companies but the iPhone maker is the manufacturer’s biggest customer. The changes in pricing will result in an increased 10% cost in manufacturing 7-nanometer and smaller processes chips whereas the 16nm and larger processes chips will see a 20% increase in costs.

New M-series chips expected later this year

At the moment, all the current generation flagship grade chips from Apple are based on 5nm architecture. However, the company does use its older chips based on 7nm and other processes in its budget friendly product offerings. According to DigiTimes, the change in chip production costs will go into effect starting December.

The report also details the breakdown of revenue generated by TSMC. Almost half of the $13.29 billion generated in revenue was reportedly from chip orders based on 5nm and 7nm process nodes. The 16-nanometer and 28-nanometer process node orders from customers accounted for generating 25% of the total revenue.

TSMC chip wafers
TSMC chip wafers

The big question remains as to whether Apple will increase the price of its products or absorb the increased costs. The iPhone maker has largely maintained the same pricing for its product lines except for last year when 5G was added to its phones, and the unlocked models cost increased by $29 (USD). So a price increase move is not totally out of the picture.

Apple recently introduced its new iPhone 13 lineup which is powered by the new 5nm A15 Bionic chip. Also, the iPad mini has been updated to include the faster A15 Bionic chip. The company is set to introduce new Macs, powered by new M-series chips, sometime next month. 

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