I’m surprised, usually that bleeding edge the foundry still sets the terms. Even if yields are lower (55% is low for that small a die), they should have the power to set the terms, or just offer a discount if they fail the contract promise, though this might be the failure clause kicking in.
Apple is the only customer after TSMC’s N3B node. Everyone else wants N3E, which will not be available until next year. N3E has better yields but worse performance, while being easier/cheaper to manufacture. The increase in yields is greater than the loss in performance.
If TSMC didn’t offer terms to make up for the faults of N3B, there’s a very real chance that Apple would have balked and stuck with N4 again. In this case, Apple had a strong hand: without Apple, the entire N3B line would be idle and the capital expenditure to set them up would be wasted. If yields improve enough Apple might stick with N3B in the future, which would save TSMC even more money and allow them to shift back over to a better (for them) pricing model.
Apple had a comparatively strong hand for these negotiations.
Apple has been pricing on what the market will bear for a long time, maybe the entirety of the iphone’s existence. Prices may go up; they may not.
Apple will not be financially obligated to increase prices as a result of cost changes: an iphone costs something in the $300-500 range to manufacture, and Apple charges $800+ — even a doubling of the cost of the SoC will not fundamentally alter Apple’s pricing calculations.
Price increases for the 15 will be determined entirely by if Apple thinks the market will bear that price increase such that doing so would result in more profit for them.
wccftech.com
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