Taiwan Semiconductor's Chip Price Hike May Hit Apple Fans Hard

Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) has raised prices across its advanced chip manufacturing processes below 5 nanometers to offset the sharp increase in capital expenditures tied to its 2-nanometer technology expansion.

The contract chipmaker has already informed key clients, including its largest customer, Apple Inc. (NASDAQ:AAPL), about the price hikes, which are expected to take effect next year.

Apple Faces Pricing Pressure

Apple, a key Taiwan Semiconductor client for its A-series and M-series chips, may be forced to increase the pricing of its upcoming iPhone 18 series as a result leading to margin compression as it passes off some of the cost burden on its customers, Futunn reported.

Also Read: Apple’s iPhone 17 Impresses On Design, But Analysts Say AI Still Lags

Some reports also indicate Apple might delay the release of its entry-level iPhone 18 model until 2027 to manage production costs.

The new A20 chip, set to debut alongside the iPhone 18, will leverage Taiwan Semiconductor’s 2-nanometer process.

Reports suggest that the average unit cost for 2-nanometer chips will reach roughly $280, up sharply from about $45 per unit for last year’s 3-nanometer chips, marking at least a 50% increase in production costs.

Year-to-Date Stock Moves

Apple, a company with a roughly $4 trillion market cap, saw its stock gain only 8% year-to-date, as it has mostly remained focused on its iPhone game, unlike its other Big Tech peers, which remain aggressively invested in their artificial intelligence endeavors.

The $1.5 trillion market cap Taiwan Semiconductor has gained over 46% year-to-date as a key Apple and Nvidia Corp (NASDAQ:NVDA) supplier.

DRAM Supply Constraints Add Cost Headwinds

Apple also remains susceptible to escalating memory component prices. Global production capacity for standard Dynamic Random-Access Memory chips — commonly used in smartphones — is under pressure as semiconductor makers shift focus to high-bandwidth memory (HBM) chips for artificial intelligence applications. DRAM prices surged 171.8% year-over-year in the third quarter, outpacing even gold’s rally.

Price Actions: AAPL stock was trading lower by 0.14% to $269.40 at last check Friday. TSM was down 2.45%.

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