According to Taiwanese media, TSMC is going to increase the 12-inch wafer prices by as much as $400 (USD) per piece resulting in an overall increase of 25% in wafer prices. The pure-play foundry is planning on adopting a strategy wherein the price will be increased on a quarter-by-quarter basis, starting from the second quarter of 2021. Earlier this year, the foundry also canceled discounts to many clients, most of which were in the 3-5% range.
As per analysts, most of these price hikes will only be implemented for short-term and newer customers while long-term clients such as AMD, Qualcomm, Apple, and MediaTek have predetermined long-term pricing for several years. This makes you wonder how TSMC sees Intel. The latter made it clear a few days back that it’s going to continue investing in its foundry business (IDM 2.0), but at the same time will also leverage external foundry support especially up until 2023 when its 7nm fabs are expected to go live.
Most of the price-hikes should be for mining-related orders which are short-term and tend to depend on a number of factors such as crypto prices, electricity policies of different countries, etc. There’s a possibility that TSMC might also increase the pricing for chipmakers that leverage multiple foundries, the most notable candidate being NVIDIA. NVIDIA uses TSMC’s 7nm node for its A100 Ampere Data Center accelerator while the rest of its RTX 30 series consumer graphics card range is fabbed on Samsung’s 8nm process.
In 2020, TSMC’s average sales price per wafer was up to $1,634 which marks an annual increase of more than 6% compared to 2019. If the 12-inch prices are hiked on a quarterly basis, we’re going to see an increase of as much as 24-25% by the last quarter of 2021, another all-time high. Considering that the Taiwanese foundry is easily the leading producer of advanced sub-7nm chips, this gives it more than enough authority to adjust prices as per demand which is indeed very tight at the moment. The foundry’s first 5nm chips were shipped in the form of the Apple M1 SoC earlier this year. Trial production for the 3nm process is slated to start by the end of this year, with mass production planned in 2022.