TSMC to Raise Prices for Advanced and Mature Processes by Up to 10% Next Year

[Financial News, Tokyo = Seo Hye-jin, correspondent] Nikkei Asia reported on the 22nd that TSMC, the world's largest foundry, will raise prices for advanced and mature processes by up to 10% starting next year. The move reflects the cost burden from surging demand for artificial intelligence chips and the expansion of overseas factories, which will be passed on to customers.
According to people familiar with the matter, TSMC recently completed price negotiations with major customers and decided to apply a new pricing structure from next year.
For advanced processes below 7 nanometers, base prices will rise by 5% to 10%, depending on the customer and product. In particular, if a customer places additional orders for high-performance computing (HPC) chips beyond the original contract volume, TSMC will impose a surcharge of 10% to 15% on top of the base increase. As a result, the effective price increase for some advanced AI chips is expected to exceed 10%.
Mature processes such as 12-, 16- and 28-nanometer chips will also see price increases of up to 10%. However, some products are expected to face smaller hikes.
TSMC began price negotiations with customers in June and completed them this month. The company plans to apply the increases from early next year.
Industry observers say TSMC has opted for a more moderate increase than expected. Rather than raising prices immediately, the company delayed implementation until next year to give customers time to respond.
TSMC's major customers include global tech giants and fabless chipmakers such as NVIDIA, Apple Inc., Google, Amazon, Qualcomm, Arm Holdings and MediaTek.
Price increases are spreading across the semiconductor industry. Intel and AMD have already raised prices, citing shortages of semiconductors for AI servers, while VIS, a TSMC affiliate, and UMC, Taiwan's second-largest foundry, have also moved to increase prices to reflect higher costs.
The industry believes that expanding investment in AI infrastructure is driving up costs across the supply chain. Prices for fiberglass, printed circuit boards (PCB), semiconductor packaging, DRAM and NAND flash memory are also under upward pressure as AI investment expands.
TSMC has also acknowledged the burden of expanding its overseas production base. Wendell Huang, TSMC's chief financial officer, said at a recent earnings briefing that the expansion of its Arizona plant and the ramp-up of 2-nanometer mass production would pressure profitability for the time being. The company has added another $100 billion to its Arizona investment and raised this year's capital expenditure plan to as much as $64 billion.
C.C. Wei, chairman of TSMC, said, "We do not choose to raise prices four or five times all at once." He added, "Our principle is to secure reasonable profitability at a level that allows us to grow together with our customers over the long term."
Meanwhile, TSMC said in response to the report that it does not disclose its pricing policy, but Nikkei Asia reported that the company said its principle is to create value with customers based on a long-term strategy, not opportunism.
[email protected] Seo Hye-jin Reporter