Supply Chain for Apple Silicon Faces Further Price Hikes

AppleSiliconSupplyChainWoes

Those looking forward to Apple Silicon, such as the new M2, may be looking forward to supply chain issues instead. Apple is likely to face a further increase in chip prices due to a host of global and economic issues. Japanese chemical supplier Showa Denko K.K., who supplies vital chip fabrication materials to TSMC is likely going to drastically increase prices in the midst of a global chip shortage.

Furthermore, reports from Bloomberg indicate that other component makers and material suppliers are devising similar moves in the semiconductor industry due to a wider price squeeze.

Supply Chain Issues Likely to Become More Severe for Apple Silicon

In addition to numerous price hikes already occurring this year, many of these have been the result of several factors. This includes COVID-19 lockdowns and issues, the war in Ukraine, and weakening of the yen.

According to an interview with Chief Financial Officer Hideki Somemiya, the situation is unlikely to significantly improve until at least 2023.

Hideki states, “A big theme this year common to all the players in the materials industry is how much cost burden we’d be able to convince customers to share with us. The current market moves require us to ask twice the amount we had previously calculated.”

With Showa Denko being such a major supplier in the early stages of the production chain, these price hikes will likely tighten margins and pressure clients such as TSMC to pass the increased costs on to its customers. In this instance, Apple.

Companies such have Samsung have already begun talks to increase the price of chip manufacturing by up to 20%. In May, Bloomberg reported that TSMC was already warning customers of a price increase. In 2021, a hefty 20% increase was said to be the most substantial chip price increase in a decade.

Further Supply Chain Woes

Additionally, last year saw Nikkei Asia warning that Apple may be forced to pass the increased price of chips onto customers. Concerning the iPhone, 64GB storage models have seen a price of $999 since the 2017 launch of the iPhone X. Right now, the iPhone has yet to see a price hike.

However, the iPhone and iPhone 14 Max devices are likely to feature the same A15 Bionic chip from the iPhone 13 lineup. The reason for this may be due to supply chain issues.

Supply chain woes may also be the reason behind the use of a single SSD within the 13-inch MacBook Pro.

For tech fans, the next couple of years are likely to be hard. Hopefully 2023 will bring brighter days for the supply chain.

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