YOU ARE AT:Chips - SemiconductorTSMC reportedly plans chip price hikes

TSMC reportedly plans chip price hikes

Taiwan-based TSMC, the world’s largest semiconductor manufacturer, reportedly plans to raise prices between 10-20%, impacting devices from smartphones to automobiles.

The Wall Street Journal, citing unnamed sources familiar with the matter, reported that TSMC expects to raise prices on its most advanced chips by about 10% and on less advanced chips by as much as 20%. The paper said that higher prices will take effect either later this year or early next.

Apple is a major TSMC customer, so the news raises the prospect of even higher iPhone prices on the horizon; but many major semiconductor companies also rely on TSMC’s manufacturing capabilities, including AMD, Arm, MediaTek, Nvidia, Qualcomm and others. According to TSMC’s website, the company manufactured 11,617 different products using 281 distinct technologies for 510 different customers last year.

The news out of TSMC comes amid a global chip shortage that the company’s CEO has said could linger until 2023. TSMC has raised capex guidance to $100 billion over the next three years in an effort to increase its production capacity. IBM’s CEO has discussed a similar timeline before the chip shortage is likely to ease, even though multiple companies are investing billions in additional capacity in the U.S. and around the world.

“There’s just a big lag between from when a technology is developed and when [a fabrication plant]goes into construction and when chips come out,” Whitehurst told the BBC in May. “So frankly, we are looking at couple of years … before we get enough incremental capacity online to alleviate all aspects of the chip shortage.”

At a TSMC board meeting earlier this month, the company’s board gave the go-ahead on capital spending of nearly $17.6 billion for more and advanced capacity, including fab construction. TSMC is expanding the capacity of its U.S. subsidiary in Arizona as well, and the board gave its blessing to issuing $8 billion in bonds to finance that expansion. TSMC recently reported that its July 2021 revenues were up 17.5% from July 2020. The Arizona facility is expected to start production in 2024 and have the capacity to produce 20,000 semiconductor wafers per month.

Meanwhile, Intel (which also is a customer of TSMC) has laid out plans to challenge the company by increasing its own production capacity and capabilities, landing customer wins including Qualcomm and AWS.

In June, the U.S. Senate passed a measure, aimed at countering China’s technological strength, outlined $250 billion in spending, a large portion of which is designated to boosting U.S. technology research and development and chip production. According to the executive summary of the bill, it pumps tens of billions of dollars into incentives for domestic semiconductor production and R&D, with some specific funding meant to build a more robust supply chain for the chips used by auto manufacturers, who have been hit particularly hard by the chip shortage.

ABOUT AUTHOR

Kelly Hill
Kelly Hill
Kelly reports on network test and measurement, as well as the use of big data and analytics. She first covered the wireless industry for RCR Wireless News in 2005, focusing on carriers and mobile virtual network operators, then took a few years’ hiatus and returned to RCR Wireless News to write about heterogeneous networks and network infrastructure. Kelly is an Ohio native with a masters degree in journalism from the University of California, Berkeley, where she focused on science writing and multimedia. She has written for the San Francisco Chronicle, The Oregonian and The Canton Repository. Follow her on Twitter: @khillrcr

Editorial Reports

White Papers

Webinars

Featured Content