TSMC to Ramp Up Production Fees Leading to Price Hikes on Electronics [Report]

TSMC to Ramp Up Production Fees Leading to Price Hikes on Electronics [Report]

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TSMC is preparing its biggest price hike in a decade which will likely get passed on to buyers of consumer electronics. The company produces chips for Apple that are used in the iPhone, iPad, and Mac.

Nikkei reports that although prices of semiconductors have been climbing since 2020, TSMC's price hike still came as a shock to some.

TSMC has been slower than most other chip companies in raising its prices, in part because it already enjoyed such a hefty premium. But with investment costs also rising -- the company has pledged $100 billion in spending over the next three years -- the chip giant felt compelled to pass on some of the burden, sources briefed on the matter said. More urgently, industry sources say, the company is keen to weed out so-called double-booking, in which clients place orders for more chips than they actually need in hopes of securing production line space and support from contract chipmakers amid the global supply crunch. This, in turn, has made it difficult for TSMC to grasp the "real demand" picture, sources briefed on the matter told Nikkei.

"We are all in a great shock and all of our account managers need to speak to our customers to see if we can renegotiate some of the contracts," a chip executive told Nikkei. "We haven't seen TSMC introduce such a broad rate increase in over a decade."

The impact of increased production costs will be felt next year once TSMC completes its existing orders. The price hike officially takes effect on October 1st.

More details in the full report linked below...

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TSMC to Ramp Up Production Fees Leading to Price Hikes on Electronics [Report]

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