TSMC Advanced Semiconductor Price Increase
According to a report by DigiTimes, TSMC might increase its prices for all high-end processes by 5% to 10%. Technology companies will then have to pay more on orders for advanced chips.
Which Are the Chip Nodes Affected?
The proposed increase will particularly affect TSMC's most advanced and well-off-demand nodes. These include:
- 5nm / 4nm processes
- 3nm processes
- Upcoming 2nm processes.
This means that key customers like NVIDIA and Apple who rely on these nodes for their flagship products will most likely incur higher manufacturing costs for these processes. On the other hand, it is reported that TSMC might offer discounts on its older, more mature process nodes.
Factors That Most Likely Made Price Hikes Possible
The decision to raise prices is said to have several reasons that affect TSMC's profit margins:
- US Tariffs: Current tariffs will hit the firm's Taiwan-based operations.
- Cost Related to Expansion: A huge amount of investment was poured into the US expansion project from TSMC, including the Arizona facility, and total commitment has been stated to be around $300 billion.
- Currency Fluctuations: Appreciation of the Taiwanese dollar indicated a need to adjust pricing to keep profitability.
- Supply Chain Pressures: Disruptions and cost realizations throughout the supply chain also contribute to it.
Market Position and Pricing Strategy
Today, TSMC enjoys occupying an advantageous market position in the semiconductors foundry market- more than 50% of the market shares and this much demand, thanks to AI's boom, keeps the company on its toes.
However, although TSMC leads the market, there is a history of competitive pricing, which is mainly responsible for wide adoption of the company by customers. Many experts view this price hike as large but within the expectations of changers in the global economy and its accompanying cost burden of maintaining technological leadership and expansion of production across the globe.
