TSMC is ending discounts and increasing wafer prices

[nanoguy]

Why it matters: TSMC and several other foundries may be hiking prices for their wafers amid unprecedented demand for advanced chips, partly fueled by the pandemic as well as a rapid digital transformation in many organizations. In the case of 5 nm, that's almost exclusively Apple at this point with A14 and M1 SoCs, as well as Intel Xe GPUs. On the 7 nm spectrum, we have AMD, Qualcomm, MediaTek, and Bitmain.

TSMC is currently responsible for about half of the industry's EUV equipment installation base and wafer production, and is slowly gaining more ground as other chip makers struggle to keep up in the adoption of ever more advanced lithography processes.

It's also no secret that a single 300 mm wafer built on the newest 7 nm and 5 nm process nodes costs anywhere from $9,000 to $17,000. It turns out that demand for 12-inch wafers is so high that TSMC has reportedly decided to cut discounts and even increase prices for its clients starting in January 2021.

The news come hot on the heels of a report that United Microelectronics Corp, the world's third largest foundry after TSMC and GlobalFoundries, recently hiked its prices for 8-inch wafers for power management chips. And GlobalFoundries is in the middle of a restructuring, which means a slightly lower output while that is ongoing.

In the case of AMD, that could be a big problem as demand is expected to remain high for a number of its products such as Ryzen 5000 CPUs, Radeon 6000 series graphics cards, and SoCs for gaming consoles powered by AMD which includes the PlayStation 5, Xbox Series X, and Xbox Series S.

Analysts expect TSMC to generate around $12.7 billion in revenue in the fourth quarter of this year, which would mark a new record and a 21 percent year-over-year increase.

Permalink to story.

https://www.techspot.com/news/88006-tmsc-ending-discounts-increasing-wafer-prices.html

 

[captaincranky]

So basically, there's now going to be scalping from the very beginning of the food chain, instead of just at the end.

 

[Endymio]

So basically, there's now going to be scalping from the very beginning of the food chain

Scalping? No: a more rational price structure that better reflects the exigencies of current semi manufacturing, and allows supply and demand to equalize. A higher price means TSMC can expand production faster, make more chips, and thus benefit us all.

 

[VaRmeNsI]

People don't seem to understand that government can't print endless amounts of $ without consequences ie: inflation.

 

[No Longer Human]

"Analysts expect TSMC to generate around $12.7 billion in revenue in the fourth quarter of this year, which would mark a new record and a 21 percent year-over-year increase. " This is BEFORE the price increase.
Guess they need more 'to help us more'

 

[Axil00]

"Analysts expect TSMC to generate around $12.7 billion in revenue in the fourth quarter of this year, which would mark a new record and a 21 percent year-over-year increase. " This is BEFORE the price increase.
Guess they need more 'to help us more'

Where do you think the money for R&D and fabrication comes from?

 

[neeyik]

Where do you think the money for R&D and fabrication comes from?

And the fab costs are hardly tiny - TSMC claimed their 3nm plant could cost them up to $20 billion. Even if that's a huge over-estimation, just one such plant will suck up a year's worth of profits.

 

[captaincranky]

Scalping? No: a more rational price structure that better reflects the exigencies of current semi manufacturing, and allows supply and demand to equalize. A higher price means TSMC can expand production faster, make more chips, and thus benefit us all.

Should someone make a lighthearted, but slightly snarky comment, (especially me), you can't seem to respond but with a stream of condescending, pedantic, bullsh!t, can you?

 

[Adi6293]

Luckily I got a RTX3080 and a Ryzen 7 5800X, I'm now done buying any PC hardware for at least 2 years but hopefully longer

 

[Endymio]

Should someone make a lighthearted, but slightly snarky comment, (especially me), you can't seem to respond but with a stream of condescending, pedantic, bullsh!t, can you?

A newcomer I may have let slide, but, given your 16,000 posts, you should know better. If you're going to paint a target on your chest, don't complain at arrows which come your way.

 

[captaincranky]

A newcomer I may have let slide, but, given your 16,000 posts, you should know better. If you're going to paint a target on your chest, don't complain at arrows which come your way.

Someone such as yourself, who knows virtually everything about everything, should have had the common sense to realize my post was tongue in check, and should probably just chuckle, and let it go for what it was.

Fact is, I don't need a lecture from you on how desperate most of you are, for new video cards, and how people are willing to pay 2 or 3 times MSRP to get them.

Any thread about the topic stinks of desperation.

 

[JE TechSwich]

So basically, there's now going to be scalping from the very beginning of the food chain, instead of just at the end.

TBH "most" of the "scalping" has been in the middle of the food chain, not the end. Unless scalped by individuals or stores less worried about their image.

 

[jpuroila]

I hope this means that other fabs will be able to be more competitive in the long term.

 

[captaincranky]

TBH "most" of the "scalping" has been in the middle of the food chain, not the end. Unless scalped by individuals or stores less worried about their image.

Well, I forget whether it was "Red Dwarf", or "Hitchhiker's Guide to the Galaxy", but I distinctly recall an episode wherein they came to a planet populated by nothing but "middlemen". (It might have been "mid level executives""). Nevertheless, both classes are quite useless unto anybody but themselves, so I get your drift.

One thing that has been quite repugnant to me, is throughout this pandemic, all of the social parasites are out in force on OTA TV, Most notably online gambling, personal injury lawyers, and big pharma pushing some new "wonder drug", for thousands of dollars a month. Scalpers fit in nicely with this pond scum, at whatever level of transaction they might infest.

As for "sellers", in another thread, (I forget where, although it might have been the thread about PS-5 scalping), I uploaded a screen cap from Newegg, where one dealer was trying to get more than $400.00 for a GT-1050 ti. This was during the coin mining card shortage.

Back to this topic, I don't think TSMC is totally pure of heart in their motives for raising the price of their wafers, but c'est la guerre

It all comes down to them not having any real competition ATM. . Look at Intel's pricing during their decade of dominance.

 

[Endymio]

I don't think TSMC is totally pure of heart in their motives for raising the price...It all comes down to them not having any real competition

The marvelous thing about the free market is that it functions best when people don't act from starry-eyed "pure of heart" motives. When you sell your home, or when TSMC sells a wafer, you both charge what price will maximize your own self-interest.

What's ironic is that higher price TSMC is now charging will help foster the very competition whose lack you bemoan. In fact, if TSMC instead lowered its prices dramatically, you -- or someone just like you -- would be calling for action against them for "dumping", an anticompetitive act.

 

[captaincranky]

The marvelous thing about the free market is that it functions best when people don't act from starry-eyed "pure of heart" motives. When you sell your home, or when TSMC sells a wafer, you both charge what price will maximize your own self-interest.

What's ironic is that higher price TSMC is now charging will help foster the very competition whose lack you bemoan. In fact, if TSMC instead lowered its prices dramatically, you -- or someone just like you -- would be calling for action against them for "dumping", an anticompetitive act.

So, now you're gong to try and give me a lecture on human motivation, self interest, and greed? None of which are exactly front page news, even to the average 9th grader..

In nature you attack what you think you can bring down. In business you charge what you think the traffic will bear. Different but similar behaviors. TSMC sees rampant scalping on the back end of the supply chain, and figures they should snatch some of the game out the mouths of the other predators. It's really that simple.

I think they call the concept, "supply and demand". It's my understanding that you can charge more when supply is limited, and demand is great.. Gee, I hope I got that right.

Oh and by the way, don't try to read my mind, or imagine what you think I'll be posting, you're not good at it.