TSMC, the world’s largest chip maker, plans to adjust prices for the second time within a year, putting technology at risk.
According to Nikkei Asia, TSMC lifted chip prices due to rising production costs, concerns about inflation and the company’s growth ambitions amid a global supply shortage of components.
Sources said that TSMC’s chip price is expected to increase from 5% to 8% depending on the manufacturing process, starting from next year. The adjustment applies to both mainstream and advanced chips used in sensors, controllers and power ICs.
Techwire Asia TSMC’s move will directly affect end users because a series of electronic devices, from smartphones to PCs, will be affected.
Research firm Counterpoint estimates that technology could raise prices by 5-12% this year as chip suppliers raise prices. “Phone companies will suffer the most from chip price adjustments. If they don’t sell more expensive, they will lose profits. But if they raise prices, users will be more cautious in spending and 5G shipments are at risk of slowing down,” Counterpoint said.
According to analysts, although TSMC’s early announcement will help customers prepare, users will still have to buy high-priced technology equipment in the near future because manufacturers have to pay more for buying chips.
A senior executive in the chip industry said that the price increase can be applied to new chip lines, but is difficult to accept with popular or old chips.
Covid-19 and the risk of inflation slow down the demand for smartphones and personal computers, directly affecting the revenue of chip manufacturers. In addition, the price increase also reflects TSMC’s huge expenditures on the plan to scale up operations. Since the beginning of this year, the company has spent 40-44 billion USD and plans to invest another 100 billion USD to expand the factory until 2023.
TSMC’s announcement comes less than a year after its steepest correction in a decade. In August 2021, the company announced a 20% increase in chip prices due to a shortage of global supply. Some competitors such as United Microelectronics and Semiconductor Manufacturing International also changed prices several times last year. “However, due to its large global influence, TSMC’s move could shake the chip industry.” Nikkei Asia comment.
Earlier in March, TSMC Chairman Mark Liu stated that the expensive cost of components and materials had directly affected all semiconductor companies, causing high production costs.
TSMC’s decision was made in the context that the chip industry is experiencing a serious shortage of components, spare parts and materials. This situation makes the delivery time of orders can be extended up to 18 months.
ASMLEurope’s largest maker of chipmaking equipment, is concerned that rising inflation, labor, raw materials and energy costs will cut its gross profit margin by one percentage point.
TSMC has not yet commented on its decision to raise chip prices.
Thao Hien (according to Nikkei Asia)
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