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TSM raising prices 10-20%

Arthur Hanson

Well-known member
TSM is raising prices, which will give them even more ammunition to not only expand production but for increasing their technological lead even further. TSM is mastering the art and utilization of compounding to increase not only their technology but market share. TSM is a finely turned organization progressing in all facets of its extended ecosystem. They are not only making themselves winners but their ecosystem of suppliers and customers winners, other companies should learn how truly powerful trust, collaboration, and cooperation can go. I only wish politicians could learn from their example.



 
I think 10% is something the industry would be ok with. The cost of pretty much everything is up, so 10% would be inflation plus small real price increase. 20% seems pretty high and I can't imagine TSMC raising prices 20% except for a few specialized products. As a TSMC shareholder I'm happy that the stock is going up on the news, but I think price increases must be balanced with customer relationships. TSMC is historically good at striking this balance, but we'll see how customers react.
 
TSM's customers are getting cutting/bleeding-edge technology with a proven pathway to staying ahead, this is a winning combination and value that few companies in any field can match. TSM does this without gouging the customer for they have to buy bleeding edge equipment backed up the very best talent and both are never cheap. TSM has mastered spreading the cost over an ever-increasing base keeping the costs down for all.
 
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Traditionally TSMC has lowered prices every year. If, going forward if price increases become more normalized, we can expect a 15-20% growth rate instead of a 10-15% growth rate over the next 5 years. As it stands right now the stock is priced only for a mid/high single digit growth rate. The stock looks very very cheap. Of course the semiconductor industry is cyclical and if we do have a chip glut in say 2 years maybe the stock is priced appropriately. But I don't see much downside.
 
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According to Tom's Hardware (via DigiTimes), TSMC will raise wafer prices by as much as 10% for 7nm and lower. For wafers 16nm-class and higher, the prices will increase by 20% for orders set to be fulfilled starting December.

3:14 AM EST EDIT - Sorry Authur...I just noticed I linked your original article! 😅
 
Will this trickle down through the entire wafer manufacturing process?

This is also a supply and demand issue. Or perceived supply and demand issue and since the chip shortage narrative continues the semiconductor supply chain will reap the profits.
 
TSMC striving to lower costs:
TSMC will be in talks with its equipment and materials suppliers about lowering prices for next year by 15%, striving to cut its costs, according to industry sources.

https://www.digitimes.com/news/a20210831PD200.html

Not only there will be no trickle down, TSMC plans to fully exercise its monopolistic power to force suppliers to give 15% discount, on top of forcing their customers to pay 10-20% higher prices. Greed has no limits. 15% +10-20%, that will be big margin spike for TSMC.
 
TSMC striving to lower costs:
TSMC will be in talks with its equipment and materials suppliers about lowering prices for next year by 15%, striving to cut its costs, according to industry sources.

https://www.digitimes.com/news/a20210831PD200.html

Not only there will be no trickle down, TSMC plans to fully exercise its monopolistic power to force suppliers to give 15% discount, on top of forcing their customers to pay 10-20% higher prices. Greed has no limits. 15% +10-20%, that will be big margin spike for TSMC.

You clearly do not know TSMC or have a personal agenda. I would bet you will not see a margin spike anytime soon. TSMC does not do business that way. Time will tell but it would go against how TSMC operates as a collaborative services company.

Semiconductors is a long game and nobody knows this better than TSMC. Right now the market for Intel Foundry, Samsung, GF and UMC is that they are NOT TSMC. If TSMC bullies customers and suppliers that Not TSMC market will grow quite quickly.

The analogy I know is that a top performer in a company can be a jerk while they are on top. When they are not on top they will be quickly replaced, absolutely. Intel knows this all too well.
 
You clearly do not know TSMC or have a personal agenda. I would bet you will not see a margin spike anytime soon. TSMC does not do business that way. Time will tell but it would go against how TSMC operates as a collaborative services company.

Semiconductors is a long game and nobody knows this better than TSMC. Right now the market for Intel Foundry, Samsung, GF and UMC is that they are NOT TSMC. If TSMC bullies customers and suppliers that Not TSMC market will grow quite quickly.

The analogy I know is that a top performer in a company can be a jerk while they are on top. When they are not on top they will be quickly replaced, absolutely. Intel knows this all too well.

I have dealt with TSMC on and off since 1981 with about at least 10 of those years basically full time. I think I know a thing or two about TSMC. I do also recognize that TSMC earned its dominance and monopolistic position through hard work, dedication and building partnerships. It wasn't easy. Deserve to be admired. I am not sure why you are so sensitive to my comments. If I do have a personal agenda, it would be that I wish TSMC will continue to do the right thing, avoid becoming a greedy evil. Greed is good. But too much of it, may be not... TSMC margins already in the 50s. The way it is now squeezing both ends of their reach, in my view is monopolistic behavior, is it not?
 
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I have dealt with TSMC on and off since 1981 with about at least 10 of those years basically full time. I think I know a thing or two about TSMC. I do also recognize that TSMC earned its dominance and monopolistic position through hard work, dedication and building partnerships. It wasn't easy. Deserve to be admired. I am not sure why you are being so defensive about my comments. If I do have a personal agenda, it would be that I wish TSMC will continue to do the right thing, avoid becoming a greedy evil. Greed is good. But too much of it, may be not... TSMC margins already in the 50s. The way it is now squeezing both ends of their reach, in my view is monopolistic behavior, is it not?

You need to check your dates. TSMC was founded in 1987.

Is this first hand information you are basing your opinion on or are you just quoting Digitimes?

I have friends in the equipment business and I have not heard that TSMC is in fact squeezing them on price. I have also not heard from TSMC's top customers that wafer prices are being raised. I will look into this and I suggest you do as well before using the M word.
 
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I meant 1991. It would be illegal child labor for me to work in the fab in 1981 :) .

Don't get me wrong. I admire TSMC. To get to where they are today, there is nothing easy about it. Their significance as an enabler is historical (comparable to perhaps Standard Oil, Ford Motor Company, Intel, etc.). Hope the good times roll for them. And regarding raising or cutting prices, at the end it will be a negotiation between the parties.
 
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