TSMC increases prices for all silicon nodes from 7nm to 2nm to boost gross margins as AI hardware demand heats up
TSMC is building its market pricing power as global demand for AI hardware heats up. According to a Culpium exclusive report by technology analyst Tim Culpan, the silicon foundry conglomerate has informed its key customers of price hikes across the board. Whereas the prior pricing changes fell on specific leaps and bounds on the cutting edge fronts, this second wave covers everything at 7 nanometer and tighter.
The pricing adjustments are between 5 to 10% depending on the node and the order quantity. Although the high end 3nm node constitutes about a quarter of the wafer revenues for the first quarter, extending the cost increases to all nodes from 7nm down to 2nm will have a significant impact on three quarters of the company's wafer revenues. This includes even first generation EUV 7nm, it is believed by industry sources that this is likely to be applied to more mature nodes as well.
The strategic pricing move was set into place by the internal orders established by top management the earlier part of the current year for focusing on profitability. Sales people were ordered to defend the higher charging by quoting the technological excellence and client benefits to justify higher rates. Financial analyst estimated that the company's gross margins could raise by over 2% points with the 5% average increases in pricing for the next fiscal year.
The price escalation coincided with a public appearance at the North American Technology Symposium where the foundry also unveiled their future architectures (A14, A13, and A12). They also announced partnering with SK Hynix on HBM4. Further questions on price escalation went unanswered when foundry representatives would only say pricing is a long term plan.
