New Apple Leak Reveals iPhone 13 Price Shock
In a new report, Nikkei Asia reveals that TSMC, Apple’s largest chip supplier, has implemented its “biggest price hike in a decade”. The hike was initially leaked last week, but Nikkei reports that chip partners have now been informed with industry executives in “great shock” and smartphone manufacturers expected to be among the hardest hit.
“We are all in a great shock and all of our account managers need to speak to our customers to see if we can renegotiate some of the contracts," said one chip executive to Nikkei. "We haven't seen TSMC introduce such a broad rate increase in over a decade.”
Previously, Digitimes explained that TSMC was expected to split its price increases into two parts: a price increase for “sub 7nm process technologies'' by up to 5% and for “mature process technologies” by as much as 20%. The good news is the iPhone 13 will use a 5nm chip, meaning a smaller increase, the bad news is Nikkei notes TSMC already “commands production fees around 20% higher than its rivals, according to industry insiders.”
Apple is also likely to be impacted by the second part of TSMC’s price rise. The iPhone 11 and iPhone SE use 7nm chips and, if Apple is to keep its rigorous price structures in place, this is likely to have a knock-on effect to other ranges. As Digitimes notes, “Apple is likely to set higher prices for its upcoming iPhone and other series.”
“[For] products like smartphones and PCs, the price increases will be more noticeable,” agrees Peter Hanbury, of chip and supply chain specialist Bain & Co. But the question remains: By how much? Apple has the industry’s biggest profit margins, but its ability to maintain them year-on-year is also what makes the company so popular with investors.
Either way, Apple looks set to be forced into a late change of plans. Just three weeks ago, it was reported the company was against any price increases for the iPhone 13 range. But with TSMC’s price increases coming into force in January 2022 and Apple known for not changing iPhone pricing mid-cycle, the decision to pass on or swallow these upcoming cost increases has to be made now.
If Apple is feeling pressure, my guess is the company won’t hesitate to pass the additional cost onto customers. Most iPhone buyers purchase their devices on multi-year carrier deals so the cost is spread and Apple has, arguably, the most loyal fanbase of any company (even if its recent actions are testing this).
There’s also a lot to like about the new range. iPhone 13 leaks have revealed only incremental external design changes (such as a smaller notch), but there will be massive camera upgrades, bigger batteries, quicker charging, MagSafe improvements and a new WiFi standard. iPhone 13 Pro upgraders will also get high refresh rate ProMotion displays, improved 5G and potentially up to 1TB of storage.
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