TSMC Increases Chip Prices, Cell Phone Prices, Computers And Cars Will Be More Expensive In 2023

Taiwan Semiconductor Manufacturing Co. (TSMC) plans to increase chip prices. (photo: doc. Unsplash)

JAKARTA - Taiwan Semiconductor Manufacturing Co. (TSMC) plans to increase their chip prices by between 5 percent to 9 percent in early 2023. The report also adds that the increase is expected to apply to TSMC's advanced and mature processes.

"I was quite surprised when I confirmed that TSMC will raise prices again. Initially, I thought, is this true or fake news? We previously expected there will be discounts in the second half of the year, because overall demand is not very strong," said an executive in one of the chip developers to Nikkei Asia.

The cost of producing chips has increased due to supply and logistics crises and more expensive materials. As the price of TSMC's services increases, this means that the prices of mobile phones and computers to data centers and chip-connected cars also increase.

TSMC has also experienced a slight price increase in 2021, and it is a major chip supplier to giants such as Apple, AMD, Intel and Nvidia.

With this price increase, it is claimed that the peak of the imbalance in the supply or demand for semiconductors seems to have passed. This suggests that the chip shortage could be resolved by the end of 2022.

According to DigiTimes quoted from Tom's Hardware, Thursday, May 12, it is estimated that TSMC's annual revenue will increase by 30 percent, and estimates a long-term compound annual growth rate (CAGR) of between 15 percent and 20 percent.

That estimate may not be too far off, given that TSMC reported its highest revenue increase in the first quarter of 2022, up 35.5 percent year-on-year.

Even ordinary consumers may be aware of how the pandemic has affected the semiconductor industry, thanks to increased demand for consumer and work-from-home devices, but now this segment of the market is slowing down.

The effects of the Russo-Ukrainian war and the fuel price crisis have also damaged consumer confidence and spending on non-essential electronics.

But strong demand and the need for long-term structural upgrades in the high-performance computing (HPC) and 5G sectors are said to be driving growth. There is also an increasing demand for semiconductors in the auto industry, especially as more people turn to electric vehicles.

On the other hand, if the US imposes further sanctions on China-based semiconductor companies such as SMIC and Hua Hong Semiconductor, it could lead to companies moving to manufacturers outside China such as TSMC to avoid potential supply chain disruptions.