TSMC’s planned price hike could be the most substantial in a decade. (Reuters)

The global chip shortage could have a knock-on effect as Apple consumers might need to shell out a premium for their choice of gadgets. According to a Nikkei Asia report, Apple’s main chip supplier, TSMC, is in the process of hiking chipset prices to cushion the effect of industry-wide inflation triggered by the shortage of chips.

TSMC’s planned price hike could be the most substantial in a decade, the report said.

The company’s current chip prices are nearly 20 percent higher than direct rivals. Now, with smaller foundries increasing their own prices, and TSMC’s own commitment to invest $100 billion over three years, TSMC has decided to maintain its premium pricing and pass on the extra cost to clients.

TSMC hopes to stop clients from ordering more chips than they need in an attempt to secure from contract chipmakers production line space and additional support. TSMC clients will have to negotiate specific manufacturing terms before the company implements the price rise from October 1.

The company is still processing existing orders, suggesting that consumers would feel the real impact of the price hike next year when production capacity expands and existing orders are completed. Nikkei Asia sources said chip developers such as Qualcomm would pass on TSMC’s hike onto manufacturers such as Apple. TSMC also directly supplies Apple with its M1 and A14 chips.

Apple CEO Tim Cook had earlier warned that the global chip shortage would affect iPhone production. Speaking during an analyst call following the company’s June quarter earnings, Cook said MacBook and iPad sales had already been hit by the shortage. He also warned that revenue growth would slow as a result.

The Cupertino-based tech giant told investors during the June quarter that the chip shortage is expected to hold back sales up to a whopping $4 billion.