Added to the shortage of chips is a significant price hike for TSMC, according to WSJ: everything points to more expensive electronics in 2022
The semiconductor crisis means that there are not good times for the availability of a multitude of electronic products, and factors such as the growth of COVID cases in key countries in the production process such as Vietnam or Malaysia do not augur anything new. Meanwhile, The Wall Street Journal reports that TSMC, the world’s largest third-party chip maker, plans to raise prices by up to 20%.
DigiTimes has reported that TSMC has already sent information with these plans to customers for whom it manufactures chips, among which are the largest in the sector: Apple, Nvidia, AMD, Qualcomm, Mediatek, etc., that is to say, companies that the consumer almost depends on when purchasing hardware.
10% increase on more advanced chips and 20% on 16nm and higher chips
Both The Wall Street Journal and DigiTimes agree that TSMC’s price hike is split in two: a 10% increase in advanced process chips, that is, 7 nanometers down (5 nanometers so far), and a 20% increase in chips using 16 nanometers and older processes.
In this sense, the measure affects even car manufacturers, since it is in them where the manufacturing process is not so important and it is chosen to resort to lithographs that are far from the latest and are cheaper. According to income data that TSMC offers to investors, 5 and 7 nanometers account for 49% of total revenue, while processes such as 16 and 28 nm account for 14% and 11% respectively.
TSMC’s price hike is planned for the end of the year or next year, according to the aforementioned media, so if due to lack of stock we could already see price growth in all consumer technology, now it is possible that we will also see it due to a rise in the price of the components.
According to the WSJ, TSMC’s new policy serves two reasons. In the short term, reduce demand and maintain deliveries to customers who have no other option. In the long term, investing in more plants, which seems one of the expensive solutions with which to get out of the semiconductor crisis. In fact, TSMC had already announced an investment of 100,000 million in new factories and R&D.
Between the semiconductor crisis, the container crisis and the raw material crisis, we have before us a perfect storm that points to a rise in prices
Emmanuel Fromont, president of Acer EMEA, already recognized Engadget that laptop prices were rising with the semiconductor crisis as one of the keys, although there are also other factors that explain it, such as the rise in prices of raw materials or the increase in the cost of shipping the containers, another situation that is getting worse.
Chips are generally high in cost, and a year-to-year price variation can translate into higher end customer prices for new launches and current products. The price increase (confirmed by a POCO executive) that Qualcomm made from the Snapdragon 855 to the 865 by bringing the 5G modem inside the new SoC made, in 2020, much of the high-end that equipped it to go up in price compared to previous years. Each company can choose what to do, whether to reduce its margin or whether to pass on the increase in TSMC to the end customer. If it happens as in other cases, we will see more expensive technology than in 2021.