Chip giant TSMC plans further price rises amid inflation concerns

Taiwan Semiconductor Manufacturing Co. has warned customers for the second time in less than a year that it plans to raise prices, citing impending inflation concerns, cost increases and its own massive expansion plans to help ease global supply shortages, said people briefed on the issue. Nike Asia.

TSMC, the world’s largest chipmaker, plans to raise prices by “single-digit percentages” over both mature and advanced chip manufacturing technologies, according to six people with knowledge in the field. The planned price increase will take effect by early 2023, they said.

Two people said the price increase would be around 5 to 8 percent for various process technologies, from advanced nodes to older generation nodes, for manufacturing products from advanced processors, connectivity chips and sensors to microcontrollers and integrated circuits for power management.

“The early announcement is to give customers some buffer to prepare for price adjustments, while TSMC’s move to raise prices is to address the growing costs and capital needs for historic expansions,” one knowledge expert told Nikkei Asia.

Another executive familiar with the matter said given the slowdown in demand for products like smartphones and PCs, it may be difficult for customers to accept TSMC’s planned price increase “for advanced chips it may work, but for mature nodes it can be quite challenging for customers to get,” Adam said.

Rising production costs are putting pressure on chipmakers at a time when demand for smartphones and PCs has slowed due to market uncertainty caused by inflation, the Ukraine war and Cubid-related locks in China. The rise in prices also reflects the heavy costs of delaying the expansion of TSMC itself. It is spending $ 100 billion by 2023 to increase capacity, with $ 40 to $ 44 billion earmarked for this year alone.

This article is from Nike Asia, A global publication with a unique Asian perspective on politics, economics, business and international affairs. Our reporters and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the largest and growing companies listed in more than 11 economies outside of Japan.

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TSMC’s announcement comes less than a year after its biggest price hike in a decade. Last August, it told its customers it would raise prices by up to 20% amid a worldwide shortage of unprecedented chips and its historic expansion plans. Smaller rivals like United Microelectronics and Semiconductor Manufacturing International Co raised prices several times last year and in some cases actually charge more than TSMC. Still, such a rare move by TSMC shook the chip industry.

In another surprise, TSMC said last year that it would stop His practice Of lowering prices every quarter for its chip design customers after their products go into mass production and the process runs smoothly.

TSMC Chairman Mark Liu said vigorously that all semiconductor manufacturers were Directly affected By raising the prices of components and materials, which increased production costs.

TSMC’s move comes as the chip manufacturing industry faces a severe shortage of everything from components, parts and materials. This shortage extends the delivery times of machines up to 18 months to customers like TSMC, May threaten Expansion plans of the chip industry.

ASML, Europe’s largest chipmaker, has told investors it is facing inflation concerns, rising labor costs, materials and energy, as well as additional parts security fees, all of which Hurt its gross profit At 1 percentage point.

TSMC has said it does not comment on its pricing policy.

A version of this article First published by Nikkei Asia on May 10, 2022. © 2022 Nikkei Inc. All rights reserved.

Chip giant TSMC plans further price rises amid inflation concerns Source link Chip giant TSMC plans further price rises amid inflation concerns

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