TSMC plans to raise prices for the second time

According to Nikkei, Taiwan Semiconductor Manufacturing Co (TSMC) is planning to raise prices by “single-digit percentages” across the country. technology Mature and advanced chip production. The price increase plan will come into effect in early 2023. The price increase will be around 5% to 8% depending on process technologies ranging from advanced nodes to legacy nodes, producing products from processors. advanced logic, connection chips and sensors, to Microcontrollers and IC (integrated chip) power management.

TSMC’s new price increase plan will take effect in early 2023 Reuters

“Decision to raise the price of TSMC was to address the growing costs and capital needs of historic expansions. TSMC’s early announcement is to provide customers with some stepping stone to prepare for a price correction,” one of the people with knowledge of the matter told Nikkei.

According to one executive, because of the demand for products like smartphone and PCs are slowing down, it may be difficult for customers to fully accept TSMC’s planned price increase. “For advanced chips, the price increase is acceptable. But for mature technology nodes, it will be quite difficult for customers to accept.”

Pressure from chip manufacturers

Rising production costs are putting pressure on chipmakers, especially at a time when demand for smartphones and PCs is slowing due to market turmoil caused by inflation, the war in Ukraine and the economic crisis. Covid-19 lockdown in China.

The decision to raise prices also reflects the overwhelming cost to TSMC’s own expansion push. Largest contract chip manufacturer world is spending $100 billion through 2023 to increase capacity, of which $40 to $44 billion is dedicated to this year. TSMC’s new announcement comes less than a year after the company’s biggest price hike in a decade. In August 2021, the company told customers it would raise prices by up to 20% amid an unprecedented global market shortage of chips.

In fact, smaller rivals like United Microelectronics and Semiconductor Manufacturing International Co (SMIC) also raised prices several times last year. In some cases, they even charge more than TSMC. However, just such a rare move by TSMC is enough to shake the chip industry. The Taiwanese chipmaker also surprised when it said it would stop offering quarterly discounts to chip design customers, once its products go into mass production and the process goes smoothly.

TSMC’s price hike comes at a time when the chipmaking equipment industry is also grappling with severe shortages of everything from components and parts to materials. This shortage has extended machine delivery times by up to 18 months for major customers like TSMC, potentially threatening plans to expand the chip industry.