TSMC Is Not Raising Prices Despite Chip Shortage

In the Manufacturing Facility Team of Scientist Wearing Sterile Protective Coverall Set's up / Programs Modern Industrial 3D Printer, High Precision Manufacture of Semiconductors under Process.Source: Adobe Stock

Caught up in a flared discussion on Taiwanese chip foundries planning a price increase amid chip shortage, TSMC and Taiwan chip peers are seeing clarifications from industry sources which have sought to the industry culture.

Industry sources have cast doubts on price hike claims, stating Morris Chang, founder of the largest semiconductor contract manufacturer TSMC have set the core business value to honesty and integrity which would be violated if prices are increased for the signed-off deals, further smashing rumors.

In fact, chips average selling price for the first quarter only increased by a single digit percentage compared to the fourth quarter last year, disapproving a general price hike, and certain increases were settled before signing off the deals earlier this year.

Chip foundries take commitments seriously

Industry sources pointed out chip foundries take commitments seriously. Price negotiation is made prior to signing contracts. Foundries are unlikely to unilaterally announce a price hike once deals are sealed.

Other Taiwanese foundries including UMC, VIS and PSMC that have increased prices since the second half of last year were drawn on urgent and new orders that are still under negotiation which complies with the market mechanisms under tightened productions. However, originally signed-off deals are maintained and conducted according to signed contracts. 

Further rumors have said that TSMC will increase price by 30 percentage in April, to which TSMC has declined to comment.

However, most industry watchers suspect the statement, saying that production will be conducted according to contracts and no general price hikes will be weighed because of tight productions.

But production capacity is asked to increase, how does TSMC deal with it?

Given the current chip shortage, especially for automotive chips, TSMC is increasing production capacity to over 100 percentage by enhancing efficiency, using specific production processes to shorten time to market. Based on EUV mask layers, a fully loaded production capacity per month accrues to 30 thousand chips.

Clients can set urgent orders or new orders to gain these additional production rates, so prices will naturally be higher than typical processes.

 

Source: Commercial Times (in Mandarin)

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