Samsung said this week that it would adjust pricing of its semiconductor wafers in a bid to finance expansion of its S5 fab near Pyeongtaek, South Korea. Just like its industry peers, Samsung Foundry has issues meeting demand for its services, so investing in an advanced production facility is set to ensure that it will be able to produce more chips using its advanced nodes in the future. Meanwhile, the price hikes could affect costs of GPUs, SoCs, and controllers produced by Samsung Foundry.
"[Samsung Foundry] will accelerate growth by expanding Pyeongtaek S5 Line capacity and by adjusting pricing to enable future investment cycles," said Ben Suh, senior vice president of investor relations at Samsung, during the company's earnings call with analysts and investors (via SeekingAlpha and eeNews Europe).
Samsung Foundry's S5 Line is the company's most advanced production facility designed to process wafers using the company's 5LPP (5 nm), 4LPE (4 nm) and thinner production technologies. Since the fab extensively uses extreme ultraviolet (EUV) lithography, its expansion is very expensive as EUV scanners cost $120 million – $150 million (significantly more when compared to modern DUV scanners), so Samsung — which has been aggressively increasing its CapEx in the recent years — wants its customers to pay for it albeit indirectly.
Using its latest nodes, Samsung Foundry produces loads of Exynos system-on-chips for smartphones that are used by its parent company and several other smartphone makers. In addition, Samsung Foundry makes millions Ampere graphics processors for Nvidia as well as tens of millions of other SoCs for many companies. While Samsung Foundry cannot increase its quotes overnight due to contract obligations, it can adjust pricing relatively quickly, which could lead to many of the best graphics cards being even more expensive.
How Samsung Foundry's price hikes will affect prices of smartphones and graphics cards is something that remains to be seen, but certainly its customers will try to offset higher manufacturing costs somehow.
Samsung is the only contract maker of semiconductors which officially confirmed incoming wafer price hikes for its customers. TSMC reportedly eliminated discounts for large customers starting early this year, but as far as price increases are concerned, the company prefers stability over short term gains, the firm said recently. Media reports claim that UMC had increased prices for production using mature nodes, but the company has not formally confirmed this.
