TSMC to ‘hike chip prices’ to meet rising costs

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chipmaker, is planning to raise chip prices to offset the rising cost of materials and constructing overseas sites, according to Nikkei Asia.

The publication said that TSMC is looking to raise the price of both its advanced and mature chips by up to 10 per cent from 2027, citing people familiar with the matter.

It added that TSMC is expected to charge an additional rate for its advanced, 2 and 3 nanometre chips, when customer purchases exceed their initial forecasts. The same sources said this will be between 10 and 15 per cent, raising costs further for enterprises seeking to meet unexpected chip demand.

Under the plans, Nikkei Asia said, TSMC would also raise the prices of its 12 nanometre, 16 nanometre, and 28 nanometre chips. These ‘mature’ chips are used in a wide range of products including consumer computer chips, Internet of Things devices, and edge computing chips for purposes such as automated manufacturing and automotive AI.

TSMC manufactures more than 90 per cent of the world’s advanced semiconductors, per US Department of Commerce figures. It is a critical supply chain partner for tech giants such as Apple, Broadcom, Google, and Nvidia.

In its second quarter earnings statement, released on 16 July, the firm announced a 77.4 per cent rise in net income year-over-year. At the time Wendell Huang, senior VP and chief financial officer at TSMC, said the firm expects to maintain its performance in the third quarter, driven largely by “the steep ramp-up of our 2-nanometer technology”.

TSMC has previously flagged that price rises are on the horizon. In June, the firm’s chief executive C.C. Wei told shareholders that he would like to raise prices when viable, according to reporting by Reuters. “Customer demand is so high, and we can only support so much,” he said at the time.

The firm has committed a $265 billion investment to expand its US manufacturing footprint, with $100 billion announced on 16 July to increase the number of its planned chip plants in Arizona from eight to twelve.