TSMC is raising chip prices as supply shortages continue

TSMC is the biggest chipmaker in the world and the company responsible for the processors used by Apple, AMD, Nvidia, Qualcomm, and even some Intel products. And its products are about to get a lot more expensive: the company plans to raise prices of its advanced chips by around 10 percent and less advanced products by about 20 percent, according to a new report from The Wall Street Journal.

Semiconductor supply has become an increasingly important factor for major tech and automotive companies, as chips continue to be hard to come by. There are a lot of factors that go into the prices of phones, laptops, and game consoles beyond the actual bill of materials, so a 10 to 20 percent increase in processor and SOC costs may not necessarily correlate to a similar jump in price for consumers.

But raising the prices of what was already one of the most important and expensive components in a device (for example, two of the iPhone 12’s three most expensive parts are its Qualcomm modem and A14 SOC) means that we could be headed for price increases on some of the most popular devices in the world.

The Wall Street Journal’s report doesn’t specify whether Apple will be hit by TSMC’s price increases or if it will choose to pass those extra costs down to customers if it does see increased chip prices. But TSMC is quite literally the only supplier in the world capable of making chips at the advanced level and volume that Apple needs to make its A-series and M-series chips for its iPhones, Macs, and iPads.

Additionally, Apple CEO Tim Cook did warn in the company’s last earnings call that silicon supply constraints could be coming to its upcoming iPhone and iPad products this fall, especially for older, less advanced chips.

The good news is that the raised prices may actually help alleviate some of the supply issues for TSMC by reducing some of the demand that’s been driving the scarcity in parts. It’ll also help TSMC continue to raise money it needs for its ambitious investments in expanding capacity, which include spending $100 billion through 2023 on plans like its $12 billion manufacturing hub in Arizona and other projects. TSMC had previously warned that shortages would likely extend into 2022 at its latest quarterly earnings report.