Despite softening demand for chips designed for client devices due to inflation, geopolitical uncertainties, and other factors, demand for chips in general remains strong. That’s why TSMC (Taiwan Semiconductor Manufacturing Co.) is looking forward to increasing chip production prices once more, starting in 2023. The increases aren’t massive but they will still be quite noticeable for companies like AMD, Nvidia, and Intel.
The world’s largest contract maker of semiconductors plans to increase prices for most of its fabrication processes by 6% starting from January 2023, reports DigiTimes. Last year TSMC increased prices on chips made using its N7 and N5 process technologies by 10%, while prices of older N16 and thicker nodes grew 20%. Earlier this year, it was reported that TSMC was considering increasing chip prices by up to 9% starting from 2023, but it looks like the company won’t be quite that aggressive with its price hike.
TSMC and other Taiwan-based foundries expect their revenues to hit highs this year. Its utilization rate is currently about 95%, and it is not expected to fall significantly below that level any time soon, as contract makers of chips continue to ink long-term order commitments with customers.
One of the reasons TSMC and other foundries had to increase their quotes is because they are expanding their production capacities to meet demand for the long term. Meanwhile, since the supply of fab equipment is limited (there are perhaps a dozen companies that can supply lithography, etching, and deposition tools), lead times for some fab tools have extended to 30 months and are not going to contract. Since expansion costs are rising, contract makers of chips are increasing their prices.
TSMC and others have also had to increase quotes due to higher prices for electricity, raw materials, and labor. These are increasing both globally and in Taiwan. Meanwhile, TSMC is at present expanding its production capacities in Taiwan, China, and the U.S.