According to reports, TSMC has notified its customers about the upcoming sharp increase in chip production prices. The world’s largest semiconductor manufacturer will increase the prices of almost all advanced and popular process technologies to increase its gross profit margin. At the same time, the increased quotation will make the cost of products such as CPU, GPU, SoC and controller higher.
TSMC plans to increase the price of wafer processing using its 7 nm and thinner manufacturing processes by up to 10%, while the price of wafers processed using 16 nm and thicker nodes will increase by 20%, as orders are scheduled to begin in December ,report Digital age Quoting the source of the chip developer. The report said that, like other foundries, TSMC will not publicly disclose its offer, but the company intends to increase the price of a wafer processed using its 28-nanometer process to “close to $3,000 from January.”
TSMC’s N5 and N7 manufacturing technologies accounted for 49% of the company’s revenue of $13.29 billion in the second quarter, so increasing the price of these nodes by 10% may make TSMC’s revenue in the first quarter of 2022 exceed $1 billion. The foundry’s N16 and N28 processes accounted for 25% of TSMC’s revenue in the second quarter, and price increases will also bring considerable revenue to the company.
It remains to be seen how higher production costs will affect the price of actual hardware, such as AMD-designed CPUs and GPUs or Apple-developed SoCs. Apple sells expensive smartphones and personal computers, so a 10% increase in chip cost will not significantly damage the company’s balance sheet. At the same time, when companies like AMD and Qualcomm sell chips, a 10% increase in cost will either hurt their financial performance or force them to increase prices.
Demand for chips has hit a record high in recent quarters, and semiconductor contract manufacturers have to increase production to meet customer orders. In many cases, this means more production and less maintenance, which increases equipment risk and faster depreciation. Therefore, semiconductor contract manufacturers have to raise prices to offset their risks and costs. At the same time, for companies like TSMC that have invested heavily in new manufacturing capabilities, raising prices can help increase profitability and profitability.
DigiTimes said that TSMC is not the only foundry that has increased chip production prices in recent months. GlobalFoundries, Powerchip Semiconductor Manufacturing (PSMC), Semiconductor Manufacturing International (SMIC), and United Microelectronics (UMC) have all increased chip production prices due to abnormal demand.