In 2023, TSMC will increase the cost of manufacturing processes by 6%

Let’s recall the reasons that initiated the price increase: One of the first, albeit neglected, was the construction of the Chinese semiconductor infrastructure, which meant pulling workers from TSMC. For TSMC, this meant the need for better pay for (at least) key workers. The second reason had to do with cryptomania and high demands for hardware, which led to endless overtime at TSMC. In order to limit the departure of overworked employees, TSMC had to better financially compensate them for lost free time. The third reason can be found in unexpected investments. Whether we call the cause global climate change or understand it only as a fluctuation in the weather, throughout the first half of the year Taiwan suffered from a lack of water, which is used in huge quantities in semiconductor production. In order to reduce its dependence on reservoir water, TSMC began pouring money into the construction of next-generation treatment plants that would allow a significant portion of the water to be recycled. Under the fourth reason, we can include all the price increases of energy and substrates, which are needed in semiconductor production.

The price increase is not only TSMC’s domain, companies like Samsung or UMC have also raised prices – percentagewise even more than TSMC.

In connection with the UMC, I would like to digress briefly and mention its recent statement or rather concern. Due to the extreme demand for the 28nm process, the company invested $3.6 billion in the expansion of production lines in the spring of 2021. At the beginning of this year, the situation (demand for the 28nm process) began to stabilize, and UMC expressed concern that the global demand for the 28nm process would end up far below supply. In the second quarter of this year, despite this, it announced a 6% increase in the price of 28/22nm processes.

The second wave of price increases in production processes (TSMC and Samsung) occurred this year (May), when TSMC announced a price increase of 5-9% and Samsung by 10-20%.

Current market outlooks for the second half of this year expect a drop in demand for hardware (and therefore a drop in production volume), however, input costs continue to rise, so the rise in prices in the semiconductor manufacturing segment is not nearing the end and we should instead expect a third wave. In 2023, there will be a roughly 6% increase in TSMC’s wafer prices.

Therefore, although a certain part of the new generation products (processors, graphics cards) that will be released this year will still be created at this year’s prices, it can be expected that the upcoming price increase will already be reflected in their recommended price – otherwise there would be another split between recommended and real hardware prices.

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