Apple rejected TSMC’s 6% price increase request

Apple and Intel are the first customers of TSMC’s 3nm capacity. Although it has long been rumored that TSMC will mass-produce 3nm chips, with Intel delaying the release of Meteor Lake, many people have begun to worry that it will slow down TSMC’s 3nm capacity expansion plan.

According to UDN, as TSMC’s largest customer, Apple rejected TSMC’s request for a price increase, which is likely to affect the production of the next A17 Bionic and M3 series chips. Apple’s orders account for 25% of TSMC’s annual revenue, and in the past few years, it has promoted the latter’s research and development work in advanced semiconductor manufacturing technology and has considerable bargaining power.

Apple M2 chip

TSMC’s original plan was to increase prices by 6% to 9% next year. Later, after negotiation, the increase started from 3%, and the highest was increased to 6%. Since Apple uses the most advanced process nodes, the increase should be the highest. However, Apple has clearly rejected TSMC’s proposal, which is why it has recently been reported that the M2 Pro and M2 Max use a 5nm process instead of the 3nm process that was originally rumored. There is a high probability that the two sides have not reached an agreement on the price, coupled with the recent sluggish demand in the consumer market, Apple is more inclined to adopt a relatively conservative strategy.

This not only affects other M2 series chips, but also the production plans for the subsequent A17 Bionic and M3 series chips. There are reports that Apple is considering using TSMC’s second-generation 3nm process, but it will be a big test regardless of cost and time. It is not yet confirmed when the two sides can reach an agreement, and the continued stalemate will more or less hinder the advancement of Apple’s self-developed chip plan.