iPhone 14 supply chain warns of ‘drastic’ price increases
A company that supplies materials to Apple’s iPhone chip supplier has warned of major price increases it has already had to implement, and possible future hikes too.
The warning comes from Japanese chemical supplier Showa Denko K.K., which says that it expects to raise its prices even further ” as it grapples with a barrage of economic challenges confronting the $550 billion semiconductor industry.”
Bloomberg reports that there have been “at least a dozen hikes already this year” because of COVID-19 disruption and the war in Ukraine, as well as the fall of the yen. In an interview this week, the company’s CFO warned the problem is unlikely to get better until next year:
Chief Financial Officer Hideki Somemiya told Bloomberg News in an interview. The situation is unlikely to significantly improve until at least 2023, he added.
Somemiya said the company “has been forced to drastically increase the cost it passes on to customers,” stating the company was now asking “twice the amount” previously calculated of its customers.
Bloomberg reports that the supplier “expects to further raise prices and cut back unprofitable product lines.” As noted, Showa Denko is one of TSMC’s suppliers, and TSMC makes all of the chips that power Apple’s best iPhones, from the iPhone 12 and iPhone 13 to the upcoming iPhone 14, which is predicted to include a performance leap for ‘Pro’ customers.
The upshot of all these price changes is that companies like Apple are eventually also going to start feeling the pinch, with increased supply and component costs for devices that may well end up being passed on to customers.
We’ve already seen this affecting some markets. Last week Apple suddenly raised the price of some iPhone 13 and iPad models in Japan by 20% or more to cope with the pressures of the struggling yen.
With more price hikes on the way and no sign of improvement, there seems to be a very real danger that these costs will wind up hitting iPhone customers, possibly in the form of more expensive devices for us consumers, which is always a terrible deal.
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