[FoxBusiness] The world’s largest contract chipmaker is raising prices by as much as 20%, according to people familiar with the matter, a move that could result in consumers paying more for electronics.
Taiwan Semiconductor Manufacturing Co. plans to increase the prices of its most advanced chips by roughly 10%, while less advanced chips used by customers like automakers will cost about 20% more, these people said. The higher prices will generally take effect late this year or next year, the people said.
The price increases come in the wake of a global semiconductor shortage that has affected Apple and most car makers, including General Motors Co. and Toyota Motor Corp. In August, GM said it had to idle three factories in North America that make large pickup trucks, the company’s biggest moneymaker. Last week, Toyota said it would curb production by 40% in September.
The price increases have a twofold purpose for TSMC as it addresses the shortage. In the short term, higher prices push down demand and preserve supply for customers who have no other choice. Over the longer term, the higher income will help TSMC invest aggressively in new capacity, according to analysts.
The company has said it plans to spend a total of $100 billion over the next three years on new factories and equipment as well as research and development. It is expanding its production capacity in Nanjing, China, and has started construction on a $12 billion facility in Arizona.
The company’s market dominance gives it more pricing power than suppliers usually enjoy. TSMC accounts for more than half of the global semiconductor foundry market by revenue, according to Taiwanese research firm TrendForce, and it makes more than 90% of the world’s most advanced chips. |