Why you may have to pay more for Apple products – Eagles Vine

The ongoing chip shortage has made smartphones expensive. Brands like Realme, Xiaomi and others have hiked prices of a few of their smartphones. A report by Nikkei Asia now suggests that TSMC — Apple’s main supplier — is set to hike the prices of its chips. “The price of chips — and the electronic devices they power — are on track to rise into 2022 as the world’s biggest contract chipmaker joins its rivals in ramping up production fees,” states the report.
Apple isn’t the only big client TSMC has as the likes of Nvidia and Qualcomm too work with the chip manufacturing giant.
TSMC, as per the report, bring in its biggest price hike in more than 10 years. This, the company is doing to cover the increasing costs of production. Apart from this, a lot of companies “double book” — order more than they need — which is becoming an issue for TSMC. The report says that when companies do double-booking it becomes hard to obtain components. What it also does is it makes difficult for other vendors to get hold of chips. TSMC also doesn’t get to know the real picture of the chip demand. The rise in prices could curtail this practice, as per the report.

How it will affect Apple products’ prices?

There’s a possibility that Apple could take a hit and not pass on the price hike to customers. But it very well could do, as per analysts quoted in the Nikkei report. An analyst who is quoted in the report says, “”The net profit margin for smartphone makers excluding Apple is only about 5% to 10%. In that case, the rising chip costs will definitely push all the industry players to roll out higher-end handset models for next year to offset the cost impacts rather than focus on midrange or lower-end phones.”
TSMC makes the chips for iPhone, iPad as well as the new Mac models for Apple. While it’s unlikely that the price hike will come in 2021, it could happen next year, according to the report.

The Times of India

The Times of India is an Indian English-language daily newspaper and digital news media owned and managed by The Times Group. According to Audit Bureau of Circulations, it is ranked 9th in the world by circulation and 3rd in India.

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