Amidst the pandemic crisis, we are already seeing a shortage in the supply of chips that have made manufacturers increase the cost of their smartphones. Now, the cost of semiconductors is all set to increase next year, thereby making chip manufacturers hike chip rates. This adds to the already existing global shortage of semiconductors that has impacted several industries on a global scale.
Skyrocketing Semiconductor Price
As per a report by NikkeiAsia, the cost of semiconductors are on the rise since the last year of 2020. The rates witnessed new highs due to the shortage in supply, and TMSC announced the major price hike ever in a decade. Currently, it is the world’s largest contract chipmaker accounts over half the global foundry market. Also, TMSC has built chips for tech giants including Qualcomm, Apple, and NVIDIA, among others.
Furthermore, the company is also known for its advanced chip technology. Usually, it charges a 20 per cent higher fee than its rivals. Now, with the shortage in the supply of semiconductors, TMSC is running on its entire capacity. Even small foundries have ramped up their pricing as there is high demand.
The increased pricing is due to various factors, including logistics costs, expensive material and race between brands for a steady chip supply. The Taiwanese chipmaker was slower than many other foundries in increasing the costs, and this can be due to the premium cost that it already charges.
What To Expect?
As a result of the increased pricing of semiconductors, there will be an increase in the cost of consumer electronics products. These include smartphones, and we already see the result of it. Apple is one of the major TSMC clients, and the rising prices of semiconductors might leave an impact on the cost of iPads and iPhones as well. However, we can expect the tech giant to offset the cost to some extent due to its rapport with the chipmaker.
We need to wait for further clarity regarding the consequences of the increased pricing of chips and how Apple will deal with this. There could be a change if the supply chain shortage is addressed.
