A report, citing sources at various IC design firms, suggests that TSMC plans to raise prices at its chip factories as early as January 2024. Digi Times TSMC said it has been preparing for price hikes for customers for quite some time and intends to raise prices for advanced process products by 3% to 6%, depending on factors such as order volume. Those price increases will be on top of a 10-20% increase in the market price for 2022, the people said.
The semiconductor market is on a roller coaster ride as last year’s headlines reflected: shortages and surpluses, closures and expansion plans, stock market crashes and surges. TSMC is so important to the tech industry as a whole that it has seen some relief from the worst of the recent economic cycle. In recent months, between the crypto crash and the AI boom, there has been talk of a recession around the world, and there have been some signs of a decline in confidence, but things haven’t been too bad for TSMC. Now that customers like Nvidia and Apple want more, newer, and better chips, it’s no surprise that TSMC is once again confidently digging out his price increase email template.
Sources at DigiTimes claim that a number of large customers are participating in price negotiations with TSMC. Apparently, TSMC is trying to ease the potential pain of higher prices by saying that companies that accept price increases will have an advantage in pre-booking capacity. This strategy should appeal to the most successful customers where time is of the essence.
Big success tech companies like Nvidia and Apple won’t walk away from their close partnership with TSMC anytime soon. The question is whether they took these price increases with a grain of salt, or were they big enough customers to negotiate special rates better than the 3-6% price increases reported by the broader customer base? . Key customers for TSMC’s advanced process technology include AMD, Broadcom, MediaTek and Qualcomm.
Many readers are wondering if the 6% price hike TSMC charges companies like AMD and Nvidia will affect the price of the CPUs, GPUs or PC systems they buy. Questions such as these are likely to have many other unknown costs (usually) fluctuating up and down, and the relationship between a product’s bill of materials (BOM) and retail price can vary widely across companies and product categories. so it is always difficult to answer. Retail sellers also have to deal with customer expectations and psychological price targets. That’s why we often see items priced at $199, $349, $499, $999, etc.
