Taiwan Semiconductor Manufacturing Co. (TSMC) told its clients to expect a price increase of between 5% and 9% in 2023, according to Taiwanese industry sources speaking to DigiTimes. The alleged increase will apply to both TSMC's advanced and mature processes.
TSMC levied a slight price increase in 2021, but hiked prices between 10% and 20% in 2022. TSMC is a major chip supplier for Apple, AMD, Intel, and Nvidia.
It's easy to conclude, based on this pricing trend, that we're past the peak of the semiconductor supply/demand imbalance — and industry analysts seem to agree, suggesting the chip shortage may ease up by the end of 2022.
TSMC has a more bullish outlook, according to DigiTimes, estimating an increase in annual revenue of 30%, and is forecasting a long term compound annual growth rate (CAGR) of between 15% and 20%. This might not be too far off, considering TSMC reported record-high revenue increases in the first quarter of 2022, up 35.5% year-over-year.
Even casual consumers are probably aware of how the pandemic has affected the semiconductor industry, thanks to increased demand for consumer and work-from-home devices, but now these market segments are slowing down. The twin effects of the Russia-Ukraine war and the fuel pricing crunch have also dented consumer confidence and spending on non-essential electronics.
But TSMC's clients have substantial markets beyond the consumer sphere. According to DigiTimes, strong demand and the need for long-term structural upgrades in high-performance computing (HPC) sector and 5G will drive growth. There's also increasing demand for semiconductors in the automobile industry, especially as more people switch to electric vehicles.
DigiTimes also reports that TSMC may have politics on its side, if the U.S. imposes further sanctions on China-based semiconductor firms such as SMIC and Hua Hong Semiconductor. Even rumors of sanctions could lead to companies moving to out-of-China manufacturers such as TSMC to avoid a potential supply chain disruption.
According to DigiTimes, TSMC's upcoming price increase is possibly due to financial strain from overseas fab construction delays and commissioning expenditure. DigiTimes notes that US building, staffing, resource pricing, and utilities are more expensive than were initially forecast, thanks in part to skyrocketing global inflation.
TSMC's alleged 5% to 9% price hike will begin in January 2023.