Bitmain, a leading developer of application specific integrated circuits (ASIC) for cryptocurrency mining and the maker of Antminer machines, has confirmed that Taiwan Semiconductor Manufacturing Co. (TSMC) had notified its customers about planned price increases for chip production.
"On the morning of [August] 25, TSMC notified all customers that all semiconductor processes will increase their prices by 20% from now on," a statement by Bitmain reads.
Earlier this week we reported that TSMC had told its customers about its plans to increase prices for orders set to be fulfilled starting December. The world's largest foundry intends to increase prices of wafers processed using its newer N7 and N5 process technologies by 10%, while prices of older N16 and thicker nodes by 20%.
The move will increase TSMC's revenues and profit margins but will increase costs for companies like AMD, Bitmain, and Qualcomm. Boosted production costs could lead to price increases, though it remains to be seen how significantly real-world prices will be affected considering the fact that loads of products are not sold at their MSRPs.
Normally, contract chipmakers never comment on their pricing and keep all related information strictly confidential. Yet nobody can stop foundry customers from commenting on chip prices, which is exactly what Bitmain has done.
For Bitmain, chip prices may not be the most important issue. The company sells its Antminer cryptocurrency mining machines at a significant premium and usually sells everything it makes almost immediately. The company needs more ASICs from TSMC, so it's eager to pay extra and ask for additional capacity (if TSMC can provide it, of course) to get more chips and build more Antminers. Now Bitmain might increase the prices of its machines, citing TSMC's price hikes. The company says it will open sales in September for the next batch of Antminers that will be delivered in Q2 or Q3 of 2022.
"The Bitmain supply chain team will strive to steadily increase the production capacity of Antminers while adhering to manufacturing quality," the statement reads. "The next batch of ant mining machines is under preparation. It is expected to open Q2-Q3 batch sales in 2022 in September, so stay tuned!"
Something like a Ryzen 5000 CPU, for example, already has a huge markup at retail over what AMD actually pays for the processor's chips. AMD doesn't likely pay TSMC much more than $20 for a 7nm chiplet, so even a 20% increase on that would have almost no effect on the price at retail. Even adding in the IO chip from Global Founderies, and the cost of packaging them together, the actual manufacturing costs on something like a 5800X is probably not all that much more than $50 or so. There is of course R&D costs that a company like AMD has to recoup, so the remainder is not all profit, but that part of the total cost isn't going to TSMC.
Graphics cards tend to use much larger chips, but still, a 10% price hike on the 7nm node probably wouldn't result in much more than a $10 manufacturing cost increase for a higher-end card.
With general inflation very high and supply problems for many inputs this seems like a modest increase.
IMO - The fact that the older nodes are increasing more than the latest nodes is an indicator that they are trying to cover cost increases more than taking profits.
I don't fault TSMC for taking a greater share of the profits. They are the ones adding the value with their process advances.
Where would the Apple M1 and AMD Zen3 be without TSMC?
It's not greed. The best tool that a company has, that they can use to put a damper on demand that they can't keep up with, is to raise the price. Price goes up, demand falls, and the company is able to get caught up on backorders.
Um no. If there's an 8 year back log on a 1 week backlog they are still running at full capacity.
It's greed. Monopoly in action.