The ongoing chip shortage has forced TSMC to increase wafer prices by 20 percent, but according to the latest report, Apple is being given preferential treatment by being charged just 3 percent. There are several reasons why both companies may have agreed to these terms to let us discuss.
Apple Is TSMC’s Biggest Customer, so a Promise of Future Orders in Bulk Would Have Encouraged Both Parties to a Nominal Price Increase
According to Apple analyst Lu Xingzhi, the California-based giant’s orders accounted for more than 20 percent of TSMC’s revenue, reports ITHome, which would be one reason why the chip manufacturing giant would be willing to grant a concession. As Apple prepares for its iPhone 13 event that is expected to happen during the third week of September, TSMC is rumored to have prepared a 100 million A15 Bionic shipment for its biggest client.
With that kind of order just for a flagship smartphone lineup, TSMC is sure to give Apple a small price increase in comparison to orders as the Cupertino tech behemoth can make it up through bulk orders. In fact, the Taiwanese manufacturer was earlier reported to have prioritized Apple over other customers when it comes to chip orders because of the ongoing shortage.
The fact that Apple has reportedly secured 80 percent of TSMC’s 5nm orders for 2021, along with initial 3nm shipments for future iPhones, iPads, and Macs, should give its supply chain partner enough encouragement to give a massive discount to its biggest customer. Sadly, this means that all other smartphone chipset makers, such as Qualcomm, and others will have to rely on Samsung’s node, which is said to be inferior to TSMC’s.
Unfortunately, TSMC is running into some chip development roadblocks, too, and from the looks of it, Apple will not be able to unveil next-generation 3nm chips for the iPhone 14 range. This will force Apple to rely on 4nm orders instead, and according to our previous report, the company has secured an initial supply of those too to gain the upper hand against the competition.
It is not confirmed if Apple will pass that 3 percent price increase to customers when it unveils the latest iPhone 13 and M1X MacBook Pro models in the coming weeks, but we will keep you updated, so stay tuned.
News Source: ITHome