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TSMC Ends Its Volume Discounts For the Biggest Customers, Could Drive Product Prices Up

Vya Domus said:
This isn't the case where there is an equally good or better alternative and TSMC is doing something shady to prevent customers from buying competitor's products. No one else has an equally good or better node, that's it.
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I'm not mad at anybody - fanboyism is kinda human nature. We had Intel absolute dominance in lithography tech for so long, and we saw what good it brought...

On another note, comment such as "GO TSMC!" were very common in the last few years - my post is mainly because of their number.
Vya Domus said:
I don't get it, this is so bizarre, who are you mad at ? Us ? Be mad at Samsung, GloFo, Intel, and the dozens of foundries that have died off in the last couple of decades.

Seriously, this is idiotic. I don't buy wafers, do you ? Let them figure it out.
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I agree that finding another foundry that is completely customer oriented (which disqualifies Intel and Samsung) to compete with TSMC is currently impossible.

On a slightly related note, there was a great number of sinophobic anti-SMIC gloating comments - though (un)officially state-controlled foundry in China is not ideal, at least they aren't owned by a dedicated product owner (Intel, Samsung), so at least they *could've* been partially customer-oriented - at least when not producing government-ordered stuff. It's not unrealistic to happen because, well, I doubt government pays as good as would fabless customers.

I've heard that EC isn't particularly happy with the current foundry/semiconductor situation too, and plans to invest in Europe-based facilities (and IPs) - which is undoubtedly a good thing, except it won't happen in years.

Until then, TSMC has a clear path of dominance. I've heard (somewhat dubious source) that TSMC already asks few times more per waffer on the same node. Don't know if it's true, but wouldn't surprise me or wouldn't surprise me that to happen in the next period...
 
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I really wouldn't worry about it, the actual TSMC cost price is a really tiny percentage of the overall cost of a product and 3% increase on an already tiny amount is not going to effect the pricing in an noticeable way.
 
pjl321 said:
I really wouldn't worry about it, the actual TSMC cost price is a really tiny percentage of the overall cost of a product and 3% increase on an already tiny amount is not going to effect the pricing in an noticeable way.
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Depends what are the margins.
 
Vya Domus said:
The reason I specifically gave the example of Apple is because they never drop or increase the price of something, they are extremely strict about it.
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They don't drop prices, they slap on PRO or PLUS at the end and charge 500.
 
Vya Domus said:
Depends what are the margins.
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But even on a product that has a margin of 3%, the parts made by TSMC to make up that margin will be really tiny so what I am saying is it will easily be swallowed by most companies doing well or on companies really struggling then we would be looking at $1 on ever $100 of MSRP at the absolute most, so a $700 graphic card might cost $7 more, not really anything to worry about and even that is probably with the graphics card company take $5 of that as pure profit and $2 going to TSMC.
 
LOL. Graphics cards are already ridiculously expensive. Now they'll be even more expensive.
 
3% looks like a pretty laughable discount for "big customers".
I'm shocked if that is all the likes of AMD/Apple had.
 
Customers really don't have a choice. Newer nodes are expensive to R&D. Look at how long Intel flailed on theirs before they could finally start to produce something viable, and GloFo giving up on 7nm even though they showed superior performance to TSMC 7nm in early sampling, simply because upgrading or expanding their fabs was costlier than any orders they'd gain (though in hindsight, maybe they could have recouped some of that between the wafers needed for consoles, CPUs, and GPUs).

Unless there are more investors willing to help front the cost, TSMC is really the only bleeding edge fab out there, followed by Samsung and Intel.

Ironically, this shift in pricing also seems to be an unintentional nutkick to NVIDIA; after failing to try to get TSMC to reduce the costs more for them, they end up planning to return to TSMC when TSMC has ended their bulk discount offer.
 
ratirt said:
price will go up what else?
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Fly to Arizona to help dig?

pjl321 said:
I really wouldn't worry about it, the actual TSMC cost price is a really tiny percentage of the overall cost of a product and 3% increase on an already tiny amount is not going to effect the pricing in an noticeable way.
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whats 3% profit on, say about a million chips? Shareholders will be happy.
 
whats 3% profit on, say about a million chips? Shareholders will be happy.
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Yes it will be decent money for TSMC but I am saying to someone looking to buy a phone or graphics card etc then it really shouldn't make any kind of meaningful difference at all.
 
pjl321 said:
whats 3% profit on, say about a million chips? Shareholders will be happy.
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Yes it will be decent money for TSMC but I am saying to someone looking to buy a phone or graphics card etc then it really shouldn't make any kind of meaningful difference at all.
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Manufacturing costs are supposed to be controlled and predictable. Even if it's a small percentage of a increase in the BOM, multiply that by thousands (or in the case of Iphones, millions of units), and businesses all too willing to shift these costs to consumers (and why wouldn't they, they see the demand and stock of anything worth a damn being bought up immediately)... you can bet your bottom dollar it'll make a meaningful difference. Just because the difference isn't meaningful to you, doesn't mean there won't be a difference.
 
Colddecked said:
Yes it will be decent money for TSMC but I am saying to someone looking to buy a phone or graphics card etc then it really shouldn't make any kind of meaningful difference at all.
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Manufacturing costs are supposed to be controlled and predictable. Even if it's a small percentage of a increase in the BOM, multiply that by thousands (or in the case of Iphones, millions of units), and businesses all too willing to shift these costs to consumers (and why wouldn't they, they see the demand and stock of anything worth a damn being bought up immediately)... you can bet your bottom dollar it'll make a meaningful difference. Just because the difference isn't meaningful to you, doesn't mean there won't be a difference.
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If a 3% increase on the cost price of the small part of the product that's manufactured at TSMC (ie what should be much much less than a 1% MRSP increase) makes a significant difference to someone then they are over stretching and shouldn't be buying it in the first place.
If I was looking to buy a Lamborghini and Pirelli increased the cost price of the tyres by 3% that probably wouldn't get passed on to the sale price but even if it did then it really shouldn't be the difference between me believing it was a good purchase for me or a bad one.
 
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I mean, the article is a bit of FUD and I agree that the reality is the increase won't be earthshattering. Especially when prices of high end GPUs are so fluid generation to generation nowadays, there's almost no way of saying with any certainty "oh because TSMC stopped giving %3 discounts on the millions of wafers we're buying we're going to jack prices up 50".

But its just another brick in the wall of companies justification for jacking up prices.
 
When you've reached first place and have the most desirable manufacturing process in the industry, you don't need to offer discounts to win business.
 
Chrispy_ said:
When you've reached first place and have the most desirable manufacturing process in the industry, you don't need to offer discounts to win business.
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And that is fair really isn't it. The best sports people get paid more than the average ones.
We just have to cross our fingers that Samsung can get on top of their 3nm gate-all-around (GAA) transistors and that Intel can get to their 7nm process up and running quickly, smoothly and with large capacity.
 
Note to world: Invest in local fabs in your home countries.
 
BArms said:
Note to world: Invest in local fabs in your home countries.
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"Nah lets send everything overseas, what could possibly go wrong?!?"

-Every western country, 1990 - march 2020.
 
pjl321 said:
We just have to cross our fingers that Samsung can get on top of their 3nm gate-all-around (GAA) transistors and that Intel can get to their 7nm process up and running quickly, smoothly and with large capacity.
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TSMC are doing great at the moment but a lack of healthy competition is bad for everyone (except TSMC).
 
DeathtoGnomes said:
Fly to Arizona to help dig?


whats 3% profit on, say about a million chips? Shareholders will be happy.
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Sorry Bro :) I'd love to help but I'm from Texas and I ain't got a business in Arizona unless I get a light up cactus on my palm growing up :)
 
I miss the good old days when real men had fabs.
 
Vya Domus said:
The reason I specifically gave the example of Apple is because they never drop or increase the price of something, they are extremely strict about it.
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They're wafer's are the most expensive too, but it's going to hurt consumer land more than apple.
 
3% marginal discount isn't the whole story, those who have access to 6nm node is more vital. 5nm is not cheap, but 5>6nm ported adoption should be the hot commodity.
 
Vya Domus said:
Depends what are the margins.
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Generally speaking leading edge products have good margins, at this stage if you don't need the best (nodes) you can get away with lesser variants. Not to mention the corporations using these nodes have little to no competition from any other foundry, probably with the exception of AMD.
 
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