Chip giant TSMC plans further price increases amid inflation concerns

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Taiwan Semiconductor Manufacturing Co. has warned customers for the second time in less than a year that it plans to raise prices, citing inflation concerns, rising costs and its own large-scale expansion plans to help ease the global supply crisis, people informed. Nikkei Asia.

TSMC, the world’s largest contract chip maker, plans to raise “percentage interest” prices on both mature and advanced chip manufacturing technologies, according to six people who know the business. The planned price increase will take effect in early 2023, they said.

Two people said the price increase would be about 5-8 percent for a variety of technological technologies, from advanced to obsolete components, production of products from advanced processors, connection chips and sensors to microcontrollers and power management integrated circuits.

“Early communication should give customers some buffer to prepare for price adjustments, while TSMC’s price-raising step aims to address growing costs and capital needs for historic expansion,” said Nikkei Asia one experienced person.

Another manager familiar with the issue said that given the slowdown in demand for products such as smartphones and PCs, customers may find it difficult to fully accept TSMC’s planned price increases. it is difficult for customers to accept, ”the man said.

Rising production costs are putting pressure on chip makers at a time when demand for smartphones and personal computers has slowed due to market uncertainty caused by inflation, the war in Ukraine and the blockade in China linked to Covid. The rise in prices also reflects the high costs of expanding TSMC. By 2023, it is spending $ 100 billion to increase capacity, with $ 40 billion to $ 44 billion earmarked for this year alone.

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The message from TSMC came less than a year after the biggest price increase in ten years. Last August, he told his customers he would raise prices to 20 percent amid an unprecedented global shortage of chips and his historic expansion plans. Smaller competitors, such as United Microelectronics and Semiconductor Manufacturing International Co., have raised prices several times over the past year and in some cases actually charge more than TSMC. However, such a rare step by TSMC shocked the chip industry.

Another surprise TSMC said last year was to stop his practice lower prices quarterly for their client-chip designers after their products went into mass production, and the process runs smoothly.

TSMC chairman Mark Liu said there were all semiconductor manufacturers in March directly affected rising prices for components and materials that increased production costs.

This step by TSMC comes at a time when the chipmaking equipment industry is facing a serious shortage of everything from components to parts and materials. This shortcoming extends machine delivery times to 18 months for customers such as TSMC, potentially threatening plans to expand the chip industry.

ASML, Europe’s largest maker of chip tools, told investors it was facing inflation, rising labor, material and energy costs, and additional fees for fixing parts to be damaged his gross profit by 1 percentage point.

TSMC said it had not commented on its pricing policy.

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