Wednesday, July 10th 2024
TSMC to Raise Wafer Prices by 10% in 2025, Customers Seemingly Agree
Taiwanese semiconductor giant TSMC is reportedly planning to increase its wafer prices by up to 10% in 2025, according to a Morgan Stanley note cited by investor Eric Jhonsa. The move comes as demand for cutting-edge processors in smartphones, PCs, AI accelerators, and HPC continues to surge. Industry insiders reveal that TSMC's state-of-the-art 4 nm and 5 nm nodes, used for AI and HPC customers such as AMD, NVIDIA, and Intel, could see up to 10% price hikes. This increase would push the cost of 4 nm-class wafers from $18,000 to approximately $20,000, representing a significant 25% rise since early 2021 for some clients and an 11% rise from the last price hike. Talks about price hikes with major smartphone manufacturers like Apple have proven challenging, but there are indications that modest price increases are being accepted across the industry. Morgan Stanley analysts project a 4% average selling price increase for 3 nm wafers in 2025, which are currently priced at $20,000 or more per wafer.
Mature nodes like 16 nm are unlikely to see price increases due to sufficient capacity. However, TSMC is signaling potential shortages in leading-edge capacity to encourage customers to secure their allocations. Adding to the industry's challenges, advanced chip-on-wafer-on-substrate (CoWoS) packaging prices are expected to rise by 20% over the next two years, following previous increases in 2022 and 2023. TSMC aims to boost its gross margin to 53-54% by 2025, anticipating that customers will absorb these additional costs. The impact of these price hikes on end-user products remains uncertain. Competing foundries like Intel and Samsung may seize this opportunity to offer more competitive pricing, potentially prompting some chip designers to consider alternative manufacturing options. Additionally, TSMC's customers could reportedly be unable to secure their capacity allocation without "appreciating TSMC's value."
Source:
via Tom's Hardware
Mature nodes like 16 nm are unlikely to see price increases due to sufficient capacity. However, TSMC is signaling potential shortages in leading-edge capacity to encourage customers to secure their allocations. Adding to the industry's challenges, advanced chip-on-wafer-on-substrate (CoWoS) packaging prices are expected to rise by 20% over the next two years, following previous increases in 2022 and 2023. TSMC aims to boost its gross margin to 53-54% by 2025, anticipating that customers will absorb these additional costs. The impact of these price hikes on end-user products remains uncertain. Competing foundries like Intel and Samsung may seize this opportunity to offer more competitive pricing, potentially prompting some chip designers to consider alternative manufacturing options. Additionally, TSMC's customers could reportedly be unable to secure their capacity allocation without "appreciating TSMC's value."
46 Comments on TSMC to Raise Wafer Prices by 10% in 2025, Customers Seemingly Agree
When there's a will, there's a way, hahahaha :D
If they set a contract for KGD (which fabs hate but customers love [which may have been the case with nvidia on 8nm...]), or better-than-yield-difference wafer pricing given capacity, does it really matter?
I don't disagree that they have indeed hyped competition with TSMC and never quite delivered on-time, something they addressed at their last briefing. I think they stated something like seven years before parity with TSMC. That said, again, N2 would be not be competition for TSMC's N2(P), but rather again N3P, last-gen finfet versus 3rd/4th-gen GAAFET, not 3rd/4th-gen GAAFET (even if comparatively bad yields/perf versus 1st/2-gen GAAFET).
I know some think it's a foolish notion, but you must understand there HAS to be a reasoning even for something as simple as renaming the node. If that's FOR a customer, to attract customers; I don't know.
All I know is they had three versions of 3nm; assumption being to compete with n3b, n3e, and n3p. Now they have 2, which theoretically compete with n3b and n3e that (almost) nobody used.
The third was renamed to 2nm, and is a new foundation scaling/leading up to BSPD (not unlike TSMC's N2 and then N1x, even though named different nodes at that company).
So again, and I'm not disagreeing nor saying it's entirely likely, simply pointing out the option exists and could (given that in 2026 most will still be using N3P) be an option for products in 2026.
Last I checked, both upcoming GPUs families are expected 4nm; Rubin N3(e/p) in 25/26. Also, one wouldn't expect RDNA5/Zen 6 until H226, which is what makes this feasible (but also possibly late N3P parts).
It's possible, I suppose, AMD may use TSMC N2P/N1x (BSPD) for Zen 6 and/or RDNA5, but I have to question if that will even be an economical option, let-alone a feasible one, given Apple/nVIDIA.
There's also future consoles to consider in 2026 or later; chips based on those same architectures.
Do you feel Sony/MS would want to pay TSMC prices for those chips and/or want to pay to have the design ported to a different fab company? If N3P bc cheaper and/or N2P/N1x unavailable, do they want to have to redesign a shrink for GAAFET throughout the product lifecycle rather than simply shrink it along the evolution of Samsung's 2nm (and beyond, which I would assume would use similar tools)?
I'm not saying the obvious/status-quo solution isn't possible (or even most-likely), only the perhaps unlikely is indeed possible.
I can't blame any company for ignoring the desktop but man, one company left a sore taste in my mouth after they convinced anyone they are for the people :D
I predict they get most big players onboard with a very small change in price, tout the maximum as their "increased cost" which will be passed onto consumers, and everybody gets a slice of the pie except consumers, who are rapidly paying more for hardware and nobody in their right mind would blame the market...no, it's just what things cost now.
Remind me again. The last 4 years have seen the greatest amount of corporate profit margins increase, which outstripped materials increase because mathematically it had to. IE, you pay 50% more for a thing, which cost the company 20% more in materials. Once you factor the remaining 30%, between previous profit margins and new ones, the company charges 50% more to you but gets about an extra 15% in margins for nothing. It's great to be able to hide a profit margin increase with a "required" cost of materials increase. That way nobody has to admit that an executive gets to walk home richer than the real cost of things increasing would allow.
I may be old...but I remember when we had a 5% increase in the price of steel as a raw material. Weight of each part was calculated, and a 6% increase was added with the stipulation prices would be fixed for 6 months...and boy is that one heck of a good deal. Steel yo-yoed between 4 and 7%...and everybody kept making a profit without having to initiate a price increase every other month. Ahhh, but this was not a billion dollar business...so it's a bit easier to be price conservative.
wccftech.com/tsmc-slashes-7nm-pricing-amid-weakening-demand-3nm-costs-rises-10-percent/
The bleeding edge get more expensive and the common node get cheaper, for the majority of people there is nothing to complain about
but N5 gets 12% increase instead, N3 only by 5% for the entire period 2025-2027.
Anyway, if GPU tends in price-to-performance ratio continue, there's not gonna be any point in upgrading in the next 5-7 years for most people, so TSMC can shove their prices where the sun don't shine.
www.trendforce.com/news/2024/07/10/news-tsmc-reportedly-plans-to-commence-trial-production-for-apples-2nm-chips-next-week/en.wikipedia.org/wiki/2_nm_process
But it may hurt companies who have to compete with the powerful brands (like MediaTek) and whose primary customers are cost-conscious.
What about the computing tasks, the supercomputers, processors and graphics cards which leave so much performance unused on the table?
But this is generally true for corporations different from the likes of Huawei, Haier, and others, which do make premium goods.