Apple has reportedly refused to accept a price increase from its sole chip supplier, TSMC, according to Economic Daily News.

tsmc semiconductor chip inspection 678x452
The report claims that Apple, TSMC’s biggest customer, has rejected the supplier’s plans to raise chip prices next year. TSMC has planned to raise its prices by six to nine percent, depending on the manufacturing process.

TSMC’s chips were already about 20 percent more expensive compared to those of its direct competitors, but smaller foundries have raised their own prices in recent years due to higher material and logistics costs, and TSMC has committed to $100 billion in new investments during of the next years. three years, which motivates the company to raise its prices to maintain its premium and pass on extra costs to customers.

TSMC was also reportedly eager to stop its customers from canceling orders and ordering more chips than needed in hopes of securing production line space and additional support from contract chipmakers, which has made it difficult for the company to understand real demand.

After negotiations, Apple has apparently refused to accept further price increases. TSMC makes all of Apple’s custom silicon chips, but Apple is estimated to account for more than a quarter of TSMC’s total revenue, meaning the companies are quite dependent on each other. An improvement in the semiconductor industry’s supply outlook despite inflation is believed to have reinforced Apple’s reluctance to accept price increases.

Like many of Apple’s suppliers, TSMC has struggled with supply chain issues since 2020. Last year, there was speculation that Apple might have to raise device prices to account for significant chip price increases.

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