TSMC Raises 7nm & 5nm Chip Prices By Up To 10% Believe Reports

The Taiwan Semiconductor Manufacturing Company's (TSMC) headquarters in Hsinchu, Taiwan. Image: Bloomberg

Co-ordinate to reports in the Taiwanese printing, the Taiwan Semiconductor Manufacturing Company (TSMC) has raised prices for its mature and advanced semiconductor manufacturing technologies. Rumors of the cost increment started to make rounds in the media early morning in Taiwan, and subsequently in the day, publications including DigiTimes and the United Daily News (UDN) quoted integrated circuit (IC) blueprint makers to state that the price increases have indeed taken place. Insiders believe that the increases are due to constrained supply capacity in the semiconductor sector, which has been the focus of debate in the media for the past several months.

TSMC'south Chip Price Hike Causes Stock Price Rally In Taiwan And U.Due south.

The details reveal that the prices of virtually all of TSMC's manufacturing processes accept been increased, with the bifurcation signal being the company's sixteen/xi nanometer (nm) scrap node. This node is considered to be at the edge of what the industry and TSMC dub as 'mature' processes, a term which implies that they have been in product for a sufficiently long time menstruation and have been replaced past better performing and advanced processes.

These advanced processes get-go at the 10nm node and get all the mode downwardly to 5nm. Nanometers are used to define the dimensions of a transistor - a tiny electrical circuit, billions of which are printed on a single chip - and the manufacturing processes are generally marketed with the smallest dimension, a practice that has oft lead to confusion when comparing manufacturing technologies developed by different chip makers.

According to the UDN, the prices of TSMC's manufacturing processes above 12/16nm, such as the 28nm node, have been increased by xx%. The 7nm and 5nm processes, TSMC's nearly advanced technologies currently under production, will see cost increases ranging from 7% to ix%.

TSMC earned NT$ 61 billion in the 2nd quarter of 2021 with its 5nm chip manufacturing process. Prototype: TSMC Course half-dozen-Grand

Additionally, the cost increases are expected to come into effect in the fourth quarter, and they follow like increases by several of TSMC's smaller peers. Insiders have previously reported that Taiwan'south second-largest contract chip manufacturer, United Microelectronics increased its chip manufacturing prices in April earlier this year. This has resulted in higher prices for UMC, which had traditionally lagged behind TSMC in this particular arena.

Today's news comes after industry reports before this twelvemonth outlined that TSMC had canceled discounts for its major customers considering of the ongoing chip shortage. At the same time, these reports too highlighted that the fab intended to increase prices for its 12-inch wafers, generally used for manufacturing chips used in consumer electronics, by 25% or $400.

Sources also believe that the Taiwanese fab was initially hesitant to increment its prices, but ongoing trends in the chip sector, such as the need for large upper-case letter expenditures for future growth and chapters shortage, have forced its hand. TSMC plans to invest $100 billion in new facilities over the next three years, and today'southward price hike is also aimed at buffering the impact on the company's margins due to this investment.

While information technology leads with advanced chipmaking that uses ultraviolet light for printing transistors, the company volition take to procure new machines in the future as information technology further reduces transistor sizes. Taiwanese IC firms also believe that since they volition exist unable to fully blot the impact of today's cost increases, the end consumer volition also have to bear some of it.

TSMC'south Avant-garde Depository Receipts (ADRs), which are traded on the New York Stock Commutation (NYSE) under the ticker (TSM), is up by v% today and the company'south share price increased by 2.3% during trading in Taiwan.