TSMC：No more discount for large customers

[tonyget]

TSMC Is Reportedly Terminating Discounts and Increasing Prices

TSMC has reportedly dropped volume discounts for its largest customers.

www.tomshardware.com

TSMC Is Reportedly Terminating Discounts and Increasing Prices​

Taiwan Semiconductor Manufacturing Co. (TSMC) has annulled volume discounts for its largest customers and raised prices amid overwhelming demands for its services, a media report claims. Other contract makers of semiconductors reportedly did the same in recent months.

As demand for personal computers, game consoles, televisions, smartphones, and other advanced electronics rises, so does demand for all kinds of chips. Leading-edge system-on-chips made using 5 nm and 7 nm process technologies designed for PCs, consoles, and handsets usually make headlines when people can't get their new graphics cards or processors. But each advanced SoC is accompanied by a power management IC, a chipset, and/or an I/O controller that are crucial for its operation and which are made using mature nodes. Without those semiconductors, it's impossible to build actual products, which is why numerous makers of various devices are complaining about general shortages of components.

TSMC's largest customers also happen to use its most advanced fabrication process, so select clients of the foundry receive discounts for the 300mm processed wafers they purchase. TSMC's discount prices fell within 3%, but the world's largest contract maker of semiconductors had decided to cease discounts starting next year, reports Taiwanese Central News Agency.

TSMC traditionally does not comment on unofficial information regarding its prices and it is unclear whether the company omits discounts for all of its customers. Furthermore, it is unclear whether the plan to abandon discounts was caused by overwhelming demand or increased pricing quotes by TSMC's rivals.

Over the past few months numerous reports emerged claiming that demand for basic chips produced on 200mm wafers outpaced supplies, which is why companies like United Microelectronics Corp. had to increase their prices. According to the Central News Agency, UMC has even confirmed hikes of its prices.

TSMC and Samsung Foundry are the only companies that can offer leading-edge production technologies, such as 5 nm, 6 nm or 7 nm. Due to high demand and lack of competition (as it is impossible to switch from one foundry to another quickly), contracts for semiconductors using advanced nodes are now a seller's market. Many fabless chip designers depend on their contractors, and are likely to feel the squeeze.
Rising prices at TSMC, UMC, and other foundries will inevitably affect prices of actual products, but it remains to be seen how significant the effect will be.

 

[Daniel Nenni]

TSMC Is Reportedly Terminating Discounts and Increasing Prices

TSMC has reportedly dropped volume discounts for its largest customers.

www.tomshardware.com

TSMC Is Reportedly Terminating Discounts and Increasing Prices​

Taiwan Semiconductor Manufacturing Co. (TSMC) has annulled volume discounts for its largest customers and raised prices amid overwhelming demands for its services, a media report claims. Other contract makers of semiconductors reportedly did the same in recent months.

As demand for personal computers, game consoles, televisions, smartphones, and other advanced electronics rises, so does demand for all kinds of chips. Leading-edge system-on-chips made using 5 nm and 7 nm process technologies designed for PCs, consoles, and handsets usually make headlines when people can't get their new graphics cards or processors. But each advanced SoC is accompanied by a power management IC, a chipset, and/or an I/O controller that are crucial for its operation and which are made using mature nodes. Without those semiconductors, it's impossible to build actual products, which is why numerous makers of various devices are complaining about general shortages of components.

TSMC's largest customers also happen to use its most advanced fabrication process, so select clients of the foundry receive discounts for the 300mm processed wafers they purchase. TSMC's discount prices fell within 3%, but the world's largest contract maker of semiconductors had decided to cease discounts starting next year, reports Taiwanese Central News Agency.

TSMC traditionally does not comment on unofficial information regarding its prices and it is unclear whether the company omits discounts for all of its customers. Furthermore, it is unclear whether the plan to abandon discounts was caused by overwhelming demand or increased pricing quotes by TSMC's rivals.

Over the past few months numerous reports emerged claiming that demand for basic chips produced on 200mm wafers outpaced supplies, which is why companies like United Microelectronics Corp. had to increase their prices. According to the Central News Agency, UMC has even confirmed hikes of its prices.

TSMC and Samsung Foundry are the only companies that can offer leading-edge production technologies, such as 5 nm, 6 nm or 7 nm. Due to high demand and lack of competition (as it is impossible to switch from one foundry to another quickly), contracts for semiconductors using advanced nodes are now a seller's market. Many fabless chip designers depend on their contractors, and are likely to feel the squeeze.
Rising prices at TSMC, UMC, and other foundries will inevitably affect prices of actual products, but it remains to be seen how significant the effect will be.

That is not how the semiconductor industry works. Wafer agreements are in place, they are legal contracts, TSMC cannot go back and raise prices. In regards to new wafer agreements that is possible but not probable as the Law of Supply and Demand certainly applies.

However, if you look at the history of TSMC you will find that they have NEVER taken price advantage of customers. Do you remember the 28nm shortage? When the other foundries did not yield at 28nm and TSMC dominated the node? There is just no price gouging precedence in the history of TSMC.

You should also know that the author of this article has zero semiconductor experience. He is just cut/pasting his way through life. Clickbait defined.

 

[Arthur Hanson]

Morris Chang always stuck by the contract, maybe future price increases due to increased costs

 

[count]

That is not how the semiconductor industry works. Wafer agreements are in place, they are legal contracts, TSMC cannot go back and raise prices. In regards to new wafer agreements that is possible but not probable as the Law of Supply and Demand certainly applies.

However, if you look at the history of TSMC you will find that they have NEVER taken price advantage of customers. Do you remember the 28nm shortage? When the other foundries did not yield at 28nm and TSMC dominated the node? There is just no price gouging precedence in the history of TSMC.

You should also know that the author of this article has zero semiconductor experience. He is just cut/pasting his way through life. Clickbait defined.

Wafer agreements are for a certain volume for a certain price. My guess is that many customers require more volumes due to increased demand, and TSMC is telling them we can't give you the same discounted price you had in your existing wafer agreement for the new volumes, you'll have to take the standard pricing. I wouldn't consider this price gouging.

If I went to Costco and bought 50lbs of flour I'd get a certain price, which would be discounted for volume. If I went back later and said "I need another 5lbs", I wouldn't be able to get that extra 5lb at the same price per pound as the 50lb bag.

 

[Daniel Nenni]

Wafer agreements are for a certain volume for a certain price. My guess is that many customers require more volumes due to increased demand, and TSMC is telling them we can't give you the same discounted price you had in your existing wafer agreement for the new volumes, you'll have to take the standard pricing. I wouldn't consider this price gouging.

If I went to Costco and bought 50lbs of flour I'd get a certain price, which would be discounted for volume. If I went back later and said "I need another 5lbs", I wouldn't be able to get that extra 5lb at the same price per pound as the 50lb bag.

This is true, if a customer needs wafers above and beyond the wafer agreement it is a different discussion. TSMC builds fab capacity based on customer demand. If TSMC has to provide extra capacity in a rush to fulfill orders that is more costly and prices will reflect that.

TSMC's financials are transparent so we will see what really happens with capacity numbers and margins, right? Again, TSMC is NOT terminating discounts so the referenced article is a false narrative.

 

[count]

Again, TSMC is NOT terminating discounts so the referenced article is a false narrative.

Totally agree, I sincerely doubt TSMC would go and reneg on a contract. It would be completely out of character with the company values and culture.

 

[tonyget]

That is not how the semiconductor industry works. Wafer agreements are in place, they are legal contracts, TSMC cannot go back and raise prices. In regards to new wafer agreements that is possible but not probable as the Law of Supply and Demand certainly applies.

However, if you look at the history of TSMC you will find that they have NEVER taken price advantage of customers. Do you remember the 28nm shortage? When the other foundries did not yield at 28nm and TSMC dominated the node? There is just no price gouging precedence in the history of TSMC.

You should also know that the author of this article has zero semiconductor experience. He is just cut/pasting his way through life. Clickbait defined.

TSMC is not run by Morris Chang anymore，you cannot exactly use the past to predict the future.

 

[herbs88]

i don’t know what do you have with TSMC but the company has been running like this the whole time