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I thought Apple usually locked in contracts with TSMC and Samsung for years in the future? They should be best positioned to weather this storm. If they are get
by khriss 4mo ago
I thought Apple usually locked in contracts with TSMC and Samsung for years in the future? They should be best positioned to weather this storm. If they are getting buffeted enough to raise prices by this much, things are going to be dire for smaller manufacturers.
Or, this could just be a convenient excuse to get even more margin.
- Analemma_ 4mo agoRAM prices started climbing more than 18 months ago. Apple’s contracts are long-term but not that long-term: they probably just expired. (If you assume a 3-year contract, 18 months is how long it would take on average for a specific market shock to hit you)
- dofm 4mo agoRight — if we can know how long ago the contracts were agreed we can predict how much more the price will have to rise, because 20% sounds like the beginning of the problem.
- stouset 4mo agoApple is notorious for their prices being extremely stable for a given SKU. If anything, this is Apple getting out ahead of where they expect memory prices to be long-term, so they can rip off the band-aid once and don’t have to do it again.
- dofm 4mo agoWell, hopefully :-) I am personally working on the assumption that prices will go up again this year or say in January, though as I have an M1 Max here it's not massively urgent.
- stouset 4mo agoThis kind of broad mid-cycle price update is essentially unprecedented for Apple. Their price points are extremely reliable, and even only occasionally do they tweak an individual product price up or down during a refresh. I’d wager the odds of another price hike like this over the next two years is essentially zero, and past that extremely unlikely for the next several years. Barring of course some new and as-yet unknowable seismic shift like we’ve just seen with memory prices. They would never do something like this only to pull the rug again on customers half a year later if there was any possible way to make this kind of change once. If anything, the most I would expect to see is individual products getting re-tweaked up or down $50, $100, or $200 over the next few years as demand adjusts and component prices settle.
- matthewfcarlson 4mo agoThat's a double edged sword. Assuming it's an 18 month contract, even when ram prices do go back to "normal" it's a year and a half until Apple has savings to pass onto to customers.
- ClarityJones 4mo agoRaising prices allows Apple to reduce demand, possibly creating some flexibility in the durations of the current contracts.
- blobbers 4mo agoIf Apple knows it's been overpaying, you can be sure that they will leverage that in future negotiations.
- deleted 4mo ago[deleted]
- y1n0 4mo agoApple has been weathering this for a while. Maybe it was bad timing with a contract rollover but they seem to have lost their primacy with TMSC. I’m guessing they are doing their best to maintain margins. I don’t know what Apple’s cash chest has these days but it’s always been enormous. But they don’t score points in the stock market by having cash on hand. They do get points for operating margin.
- theturtletalks 4mo agoEven when the M5 Pro MacBook 16 released, they did raise the price $100 but upped the hard drive to 1TB. I really thought they would wait to raise prices until the next cycle but this is a bit alarming.
- ClarityJones 4mo agoIf they never raise their prices, they can't drop them.
- deleted 4mo ago[deleted]
- cromka 4mo agoOr it's just a bluff since their memory upgrade prices were actually some of the lowest compared to the rest of manufacturers.
- TheJoeMan 4mo agoCash on the order of a hundred billion dollars. Plenty to weather this storm if they so chose so I agree with your assessment.
- Danox 4mo agoApple is perpetually doomed with the stock market Intel and IBM have more pull.
- layer8 4mo agoThe longer you lock in contracts into the future, the more expensive they get. And Apple also doesn’t want to lock themselves into volume commitments for specific production lines and at certain prices that might not make sense anymore a year or two down the line. So even Apple has limits to how much long-term contracts make sense.
- deleted 4mo ago[deleted]
- dgellow 4mo agoIts a very, very long “storm”, at some point you have to re-adjust, even if it is very painful
- breezeTrowel 4mo agoI wonder if this is the real reason Tim Cook is resigning as CEO. He's a supply chain guy and semiconductor supply chains seem utterly borked right now.
- paxys 4mo agoIt’s not a storm anymore but the new normal. People waiting for prices to come down are going to be very disappointed.
- cush 4mo agoIncluding Covid, it’s been like 6 straight years of supply constraints