Apple Silicon A / M series chip supply chain faces further price increases

Japanese chemical company Showa Denko K.K. (Showa Denko), which supplies important chip manufacturing materials to TSMC, has now been forced to raise prices significantly amid a global chip shortage. Other component manufacturers and material suppliers in the semiconductor industry are taking similar action amid a broader price squeeze.

Hideki Somemiya, Showa Denko's chief financial officer, said, "The big theme shared by everyone in the materials industry this year is how we can convince our customers to share the cost burden with us. Current market trends require us to raise to twice the amount previously calculated."

As a key supplier early in the production chain, Showa Denko's price hike is expected to tighten margins and force customers such as TSMC to pass on increased costs to their own customers, including Apple Inc. Somemiya said the situation is unlikely to improve significantly until at least 2023.

In May, Bloomberg reported that TSMC was warning its customers of significant price increases. This followed a sharp 20 percent price increase in 2021, which is said to be the sharpest chip price increase in a decade.

Last year, Nikkei Asia warned that Apple could be forced to pass on increased chip prices to its customers. Since the launch of the iPhone X in 2017, Apple's flagship iPhone model has sold for $999 for the 64GB version, and further price increases have yet to hit the iPhone line. This year iPhone 14 and iPhone 14 Max devices are widely expected to use the same A15 bionic chip as the iPhone 13 series, which could be a further step taken by Apple to deal with continued supply chain pressure on the chip.