TSMC Leads a New Round of Semiconductor Price Increases
Against the backdrop of a global semiconductor market recovery, TSMC has recently sent out a significant signal, indicating that the semiconductor industry may be on the verge of a new round of price increases. According to a report by Taiwan's Commercial Times on June 17th, due to insufficient production capacity to meet demand, TSMC plans to raise prices for its 3nm and 5nm advanced processes and advanced packaging. This move not only reflects the strong market demand but may also have a profound impact on the entire industry chain.
It is understood that the price increase for TSMC's 3nm foundry services may exceed 5%, and the annual price increase for advanced packaging is expected to be between 10% and 20%. This adjustment is not baseless but is based on a comprehensive consideration of market supply and demand relationships and production costs. Currently, TSMC's 3nm capacity has been fully booked by industry giants such as NVIDIA, AMD, and Intel, and the supply shortage is expected to last until 2026.
At the same time, TSMC's 5nm process node continues to receive orders for AI semiconductors, with production capacity utilization remaining at a high level. Analysts predict that TSMC's advanced process prices, including 3nm and 5nm, will be adjusted. As the supply of 3nm becomes increasingly tight, customers led by Qualcomm have begun to prepare for price increases. Supply chain news indicates that Qualcomm's Snapdragon 8Gen4, which uses TSMC's N3E process, has seen a 25% price surge compared to the previous generation, a rise that may trigger a subsequent trend of price increases.
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In addition to TSMC, other semiconductor manufacturers are also following suit with price increases. A report by Morgan Stanley shows that Hua Hong Semiconductor's wafer factory utilization rate has exceeded 100%, and it is expected that wafer prices will be increased by 10% in the second half of this year. Moreover, the adjustment of wafer foundry prices has been passed on to power semiconductor manufacturers, who have also seen a wave of price increases this year.
Behind this round of price increases is the strong recovery of the semiconductor market and the rapid development of AI technology. With the widespread application of AI technology, the demand for high-performance semiconductors continues to grow, driving market prosperity. In addition, forecasts from the Global Semiconductor Association and the World Semiconductor Trade Statistics Organization also show that the global semiconductor market will achieve double-digit growth in 2024.
In this context, TSMC's price increase may trigger a chain reaction across the entire industry chain. The trend of price adjustments is gradually spreading from components to wafer foundry ends. However, this wave of price increases also brings opportunities for industry reshuffling. Companies with technological advantages and economies of scale are expected to further enhance their profitability by raising product prices; whereas companies with weaker technical strength and smaller scale may face greater market competition pressures.
In the global semiconductor market, TSMC has always been a leader and a technological benchmark. The price increase signal recently released by the company has attracted widespread attention in the industry, indicating that the semiconductor industry may be facing a new round of price increases. This change will not only have a profound impact on the entire industry chain but may also reshape the industry landscape and market competition dynamics.
I. The Driving Forces Behind TSMC's Price Increase
TSMC's price increase mainly involves advanced processes and packaging technologies such as 3nm and 5nm, and there are multiple driving forces behind this. First, with the continuous advancement of technology, the research and development and production costs of advanced processes are constantly rising. TSMC has made significant investments in high-end processes such as 3nm and 5nm. To maintain a healthy profit margin and continuous technological innovation, price increases have become an inevitable choice.Secondly, market demand is also an important factor driving price increases. Currently, TSMC's advanced process capacity is in high demand and several tech giants have already booked capacity for the next few years. This strong market demand provides TSMC with the room and confidence to raise prices.
II. Impact of the Price Increase Trend on the Industry Chain
TSMC's price increase will have a domino effect on the entire semiconductor industry chain. Firstly, for TSMC's direct customers, such as Qualcomm, Nvidia, AMD, etc., they will face the pressure of rising costs. These companies may pass on some of the costs to downstream consumers, thereby triggering an increase in the prices of electronic products.
Secondly, for other semiconductor manufacturers, TSMC's price increase may trigger a follow-up effect. Some companies with technical advantages and market positions may follow TSMC's lead and raise product prices to maintain profit margins. This will further push up the price level of the entire industry.
In addition, the price increase trend may also affect the supply chain of semiconductor equipment. With the rise in manufacturing costs, equipment suppliers may face greater cost pressures. To maintain profitability, they may need to raise equipment prices or reduce production costs, which will affect the stability and efficiency of the entire supply chain.
III. Industry Landscape and Market Opportunities
TSMC's price increase not only reflects changes in market supply and demand but also reveals the evolution of the industry landscape. In the global semiconductor market, companies with advanced process technology will gain greater say and market share. This will further intensify competition and reshuffling within the industry.
For companies with technical advantages, the price increase trend brings market opportunities. They can further enhance profitability by raising product prices and increasing investment in research and development and innovation. This will help to consolidate market positions and expand into new application areas.
However, for companies with weaker technical strength and smaller scale, the price increase trend may bring greater challenges. They may face difficulties such as rising costs and being squeezed out of market share. To cope with these challenges, these companies need to strengthen technological innovation, improve product quality and service levels, and stand out in fierce market competition.
IV. Future Outlook and Response StrategiesFacing the new round of price increases in the semiconductor industry, all parties in the industry chain need to adopt proactive response strategies. Firstly, companies should strengthen supply chain management and optimize procurement and production processes to reduce costs. At the same time, they should increase investment in research and development and innovation to enhance product competitiveness and market position.
Secondly, governments and industry associations should strengthen their support and guidance for the semiconductor industry. By providing policy support, financial assistance, and talent training, they can promote the healthy development of the industry and improve its international competitiveness.
In summary, the new round of semiconductor price increases led by TSMC will have a profound impact on the entire industry chain. All parties need to closely monitor market dynamics and adopt proactive response strategies to meet future challenges and opportunities. The new round of semiconductor price increases led by TSMC is both a reflection of market supply and demand relationships and an inevitable trend in industry development. In the coming period, as AI technology continues to develop and market demand keeps growing, the competitive landscape and pricing system of the semiconductor industry are expected to undergo new changes.