Global foundry leader TSMC (TSMC) successively notified its customers on August 25 that the company’s new orders for processes over 7 nanometers will increase by 20%, and advanced processes below 7 nanometers will increase by 7% to 9%. . The news shocked the global semiconductor supply chain, and analysis said it would directly impact the global semiconductor industry and related products.
In fact, according to media analysis in Taiwan, TSMC has rarely raised prices in the past, but at this moment, when global foundry production continues to fall short of demand and there is a serious shortage of chips, other smaller foundries have raised prices several times. In addition, TSMC is actively setting up factories and decided to increase prices due to increased cost requirements.
Xu Zunci, a researcher from Taiwan, told the BBC in Chinese that the 8-inch wafers produced by TSMC’s foundry account for about 45% to 50% of the global market, and the proportion of mature 12-inch wafers even exceeds 70%. The price increase will definitely affect customers. Product prices and operations of other semiconductor supply chain manufacturers.
However, she emphasized that because the global semiconductor shortage will continue into 2023 or 2024, it will not affect the cooperation between TSMC and large customers in the short term, "but whether it is possible to adjust orders in the long term, it still needs to be observed."
Reasons for TSMC's price increase
According to external assessments, TSMC’s price increase is mainly due to a severe shortage of global chips. In the face of demand far exceeding supply capacity and other peers are also facing price increases, TSMC has made relevant decisions.
A former senior executive of TSMC revealed to the financial magazine "Today" that the shortage of global chip foundry capacity has caused foundry peers to raise prices. Related major manufacturers in Taiwan, including UMC, Advanced Semiconductor Manufacturing Co., Ltd., and Power Semiconductor Manufacturing Co. have increased their prices. "TSMC has always been a price setter. If TSMC sells 100 yuan, UMC will probably sell at most 80 yuan, and others can only sell for lower prices. ..... But since last year, UMC has adjusted the price all the way from 80 to 90, and now it has risen to 110, which is more expensive than TSMC. It's like the price of Mercedes-Benz cars is lower than Toyota. TSMC can't afford it. Live!"
In addition, TSMC was "invited" by the former president of the United States to set up factories in the United States two years ago. Now the US factory has started construction, and this year it has been reported that Germany and Japan have invited to build new factories and R&D centers in the two countries.
Former Barclays/Citi Securities Asia Chief Semiconductor Analyst Andrew Lu analyzed that this time TSMC's price increase is just in line with the trend. He believes that in the past, TSMC believed that the foundry industry should not raise prices as demand increased, and lower prices as demand deteriorated. However, TSMC previously did not invest in mature manufacturing processes (ie, chip manufacturing processes above 28 nanometers, and the following are advanced manufacturing processes). As a result, the share was given to the industry for nothing. It also caused a bottleneck for customers' short materials (referring to power supplies or driver ICs, etc.), making TSMC's advanced manufacturing process The long material is jammed. It can be said that the cost of TSMC’s advanced manufacturing process has been increasing, and it really can’t be sustained.”
What is the influence?
Most of the external analysis pointed out that TSMC’s price increase is not a wild demand in the context of global chip shortages. This shows that although TSMC is still the global chip foundry leader, it faces the challenge of price competition in the industry. It is in the international chip war. The competition is more intense.
For example, recently, countries such as Europe, the United States, and Japan have successively reviewed the autonomy of relevant supply chains, believing that excessive reliance on a single supply chain is not only harmful to domestic enterprises, but also detrimental to national security.
Xu Zunci, who has been studying the global semiconductor supply chain for a long time, explained that these statements put TSMC under a lot of pressure: "For example, the shortage of automotive chips a while ago is essentially a problem of global supply chain management and not caused by TSMC. This time TSMC has raised prices. It is very sensitive and may re-ignite discussions among countries on the autonomy of supply chains."
In any case, after the new crown epidemic, the outside world is expected to adjust the global semiconductor supply chain and move towards a new trend of diversified development. Xu Zunci added, "From this year to next year, nearly 30 fabs are expected to enter the market globally. Although TSMC’s position will not be shaken at present, other smaller fabs, integrated circuit design houses and other manufacturers are expected to enter the market. It is estimated that they will face greater competitive pressure."
