TSMC's silicon wafer price hike could affect Apple's iPhone 13
Apple's longstanding primary source for silicon, the Taiwan Semiconductor Manufacturing Company (TSMC), was expected to hike prices by 15% for its silicon wafers when the auto industry was facing a chip crunch. However, TSMC is yet to hike the prices for its 12-inch wafer. But with Taiwan's water crisis worsening, a price hike is likely and iPhone 13 buyers are expected to bear the brunt.
United News reports that TSMC could hike the price of its 12-inch wafer by around $400 per piece. This 25% hike could send prices to a record high. Earlier this year, TSMC even canceled the 3-5% discounts it had negotiated with clients in the past. However, United News speculates that the price hike will only be for new customers.
Although Apple has been a TSMC customer for long, it probably hasn't booked production slots for the iPhone 13's wafers and processors. This means that it is likely Apple will have to pay TSMC's hiked prices. Even if Apple offsets the wafer price hike by cutting its margins, iPhone 13 prices are rumored to see an increase.
In 2020, TSMC started shipping chips on the 5nm process node. This meant that the 5nm A14 Bionic chip for the iPhone 12 could pack 134 million transistors per square millimeter as opposed to the 7nm A13 Bionic chip which housed 90 million transistors per square millimeter. During the second half of 2022, TSMC could reportedly start shipping 3nm chips.
TSMC's prices are on the rise reportedly due to a water crisis plaguing Taiwan. The country received poor rainfall and wasn't even hit by any typhoons last year. Water reserves are only expected to last through May. The production of silicon wafers is a water-intensive process. TSMC has reportedly arranged for 100 water tankers, 20-ton capacity each, to deliver water to its facilities.
Typhoons are usually associated with economic loss. However, they also bring heavy rain which reduces the likelihood of drought the following summer. Taiwan witnesses around four typhoons each year but in 2020, not one occurred. Taiwan's droughts will reportedly worsen in years to come.
The additional operating costs could impact wafer availability and pricing in the near future. Poor silicon yield and chip shortage have affected graphic card prices as well. Nevertheless, TSMC reportedly earned the Taiwanese equivalent of $18.5 billion last year. The revenue is 50% more than it was in 2019. Meanwhile, Intel also announced a $20 billion investment for its Foundry Services.
