A company that sells materials to Apple’s iPhone chip supplier has issued a warning about significant price increases that it has already been forced to undertake, in addition to the possibility of additional price rises in the near future.
As the $550 billion semiconductor sector faces an onslaught of economic issues, the warning comes from Japanese chemical supplier Showa Denko K.K. Showa Denko says it expects to boost its pricing even higher.
There have already been “at least a dozen hikes” this year due to the disruption of COVID-19, the conflict in Ukraine, and the depreciation of the yen, according to Bloomberg. The CFO of the company said in an interview last week that it is doubtful that the problem will be resolved before next year.
In an interview with Bloomberg, CFO Hideki Somemiya spoke to Bloomberg about the company’s financial results and strategy. He noted that the situation is unlikely to change considerably until at least 2023.
When Somemiya spoke about how the company was now charging clients “twice as much” as they had previously, she said it was because the company was compelled to “significantly increase the cost it passes on.”
According to Bloomberg, the supplier “expects to significantly boost prices and cut back on unproductive product lines.” Apple’s “Pro” customers are expected to see an increase in performance on their iPhone 14, which is expected to be powered by TSMC, one of Showa Denko’s suppliers, as well as the chips that power the iPhone 12 and iPhone 13.
All these price changes mean that corporations like Apple will eventually feel the pain, with higher supply and component costs for gadgets that may possibly be passed on to consumers.
In some markets, we’ve already seen the impact of this trend. Apple raised the prices of select iPhone 13 and iPad models in Japan by 20 percent or more last week in order to deal with the demands of the weakening yen.
Since there are no signs of a reduction in prices in sight, there is a genuine risk that these costs will be passed on to iPhone customers, maybe in the shape of more expensive gadgets for us consumers, which is always a bad bargain.
Prime Day iPhone discounts may be a more financially viable choice for many people who need an iPhone upgrade but are concerned about overspending.