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TSMC to again raise prices in 2023

Daniel Nenni

Admin
Staff member
The good thing about the semiconductor shortage narrative is that TSMC can spend CAPEX and raise prices with impunity. Let's keep the shortage narrative going!

The price hike would be the second in less than a year but less than the 15% rise reported for 2022. TSMC's CAPEX is at $44B for 2022 and I don't see that changing with the success of N3. It will be interesting to see if Intel and Samsung spend all of their reported 2022 CAPEX with a slowdown looming.

TSMC Price Raise SemiWiki.jpg



TAIPEI -- Taiwan Semiconductor Manufacturing Co. has warned clients for the second time in less than a year that it plans to raise prices, citing looming inflation concerns, rising costs and its own massive expansion plans to help alleviate a global supply crunch, people briefed on the matter told Nikkei Asia.
 
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Arthur Hanson

Well-known member
The semi ecosystem has created many new products and endeavors, and could there just be a brief pause as the system digest what is already out there? The speed of everything is also driving obsolescence at an ever-increasing pace advancing the demand curve. Any thoughts on this would be appreciated.
 

Xebec

Active member
The good thing about the semiconductor shortage narrative is that TSMC can spend CAPEX and raise prices with impunity. Let's keep the shortage narrative going!

The price hike would be the second in less than a year but less than the 15% rise reported for 2022. TSMC's CAPEX is at $44B for 2022 and I don't see that changing with the success of N3. It will be interesting to see if Intel and Samsung spend all of their reported 2022 CAPEX with a slowdown looming.

View attachment 737


TAIPEI -- Taiwan Semiconductor Manufacturing Co. has warned clients for the second time in less than a year that it plans to raise prices, citing looming inflation concerns, rising costs and its own massive expansion plans to help alleviate a global supply crunch, people briefed on the matter told Nikkei Asia.

What was the last year/few years that we had a demand curve like this for foundry services? Was it all the way back in the late 1990s or something more recent?

I'm curious how the foundries might react to both pricing and CAPEX if demand slows after a large rise initially.
 

benb

Active member
The 20% rise by Samsung or TSMC could be a monetary phenomenon. There is a balance between demand for goods (chips, NAND or DRAM say) and supply of the money being used to pay for those goods. The Bloomberg Commodity index has increased by 34% in the last 4 months, for things like oil, gas, corn, wheat. You could argue NAND or DRAM are the same, and have the same driver: The US Federal reserve created inflation after the pandemic by increasing the money supply by 6 trillion dollars (6 million millions), so there is more money chasing the same amount of goods, driving the price of those goods up.

You could also observe that 20% is less than 34%, so it's a moderate increase. And like with oil and gas, price rises create incentive to produce more, which ultimately is what drives prices back down again.
 
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Daniel Nenni

Admin
Staff member
Curious if this is fully inflation related or entering foundry oligopoly territory.

It will certainly calm demand a bit. I wrote about it here:


Semiconductors are like a freight train rolling along. It is going to take a lot to stop it.
 

Fred Stein

New member
One assumes their costs are rising, raw materials, labor, cost of funds, etc. TMCS's ace is higher yields. Interesting to see how this industry-wide increase impacts consumer electronics prices and margins.

It would be great to see a curve of cost per circuit over time. Daniel, your article about Malcomm forecast shows more advanced process growing very rapidly which implies high circuit density. This may be moot considering the relentless demand for more integration by device makers. Apple is the prime example.
 

Daniel Nenni

Admin
Staff member
One assumes their costs are rising, raw materials, labor, cost of funds, etc. TMCS's ace is higher yields. Interesting to see how this industry-wide increase impacts consumer electronics prices and margins.

It would be great to see a curve of cost per circuit over time. Daniel, your article about Malcomm forecast shows more advanced process growing very rapidly which implies high circuit density. This may be moot considering the relentless demand for more integration by device makers. Apple is the prime example.

Here is a slide from a recent keynote. As you can see Apple and TSMC have done quite well with Moore's Observation. 15B battery powered transistors in my hand today, amazing:

IMG_0209 (2).jpg
 

Fred Stein

New member
Circuits doubling every two years, or about 40% p.a. Please excuse my rounding errors. And the M-series runs parallel at a higher level.

I'd love to see the chip price comparisons of Apple's A-series vs. Qualcomm's. Of course the device makers have to generate good margins to TSMC and Qualcomm.
 

benb

Active member
It will certainly calm demand a bit. I wrote about it here:
Demand destruction: It's a problem with inflation, higher prices at some point destroy demand, yet you have to raise prices enough to create the fat profits that create incentive for more production to enter the market.

You could interpret Intel Foundry entering the market as a response to the fat profits at TSMC (and Samsung Foundry).

This gets cast in moral terms (price gouging). Price gouging, and greed, serve a purpose.
 

Fred Stein

New member
Good points. One more dataset, yield, matters. I've heard (I think from SemiWiki) that TSMC gets substantially better yields, improving profitability at price parity. At last quarterly, they predicted a gross profit margin of 56% to 58% in the June quarter, up from 55.6% in March. That could be due to product mix or price action or both.

On a side note, TSMC's high gross margin supports aggressive CAPEX. It's hard to see anyone catching them.
 

Mike Bruzzone

New member
March 2021 to October 2021 AMD OEM V5x price went up 26%. AMD also probably took a few points?

AMD TSMC and Intel cost assessment here;





and more here;



Mike Bruzzone, Camp Marketing
 

Mike Bruzzone

New member
Intel IFS entry back in March 2021 TSMC raised the price umbrella 20% to 26% thereabouts TSM let Intel is and as factor cost increase on an upward sloping cost curve Intel's cost structure, monopoly in reconfiguration from supply side to demand cost optimized finally fits in with economically responsible governance? Mike Bruzzone, Camp Marketing
Demand destruction: It's a problem with inflation, higher prices at some point destroy demand, yet you have to raise prices enough to create the fat profits that create incentive for more production to enter the market.

You could interpret Intel Foundry entering the market as a response to the fat profits at TSMC (and Samsung Foundry).

This gets cast in moral terms (price gouging). Price gouging, and greed, serve a purpose.
 
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