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TSMC Anticipates Raising of Chip Prices

Taiwan Semiconductor Manufacturing Co. on Tuesday said it may raise prices of high-end chips it makes due to increasing oil prices, inflation and necessity to invest into next-generation production equipment. The price boosts will either affect customers of TSMC, who will have to suffer lower profit margins, or end-users, who will have to pay extra for final products if manufacturers of electronics decide to raise prices as well.


“Average selling prices have been falling and profits have been under pressure, and we have to work together to create value,†said Jason Chen, a company vice president in charge of global sales and marketing, told a TSMC technology symposium, reports Reuters news-agency.

According to the high-ranking executive, price changes would be mostly for chips made by advanced process technology, but would not say how big they would be or when they would occur. He also did not indicate when TSMC last raised prices. TSMC also does not disclose terms of the deal with its customers.

Presently the largest customers of TSMC are graphics chip designers ATI, graphics product group of Advanced Micro Devices, and Nvidia Corp., who both utilize leading-edge process technologies to build advanced graphics processing units (GPUs). Both companies also suffer from high prices of gasoline as well as inflation and both ATI and Nvidia have to invest further into research and development in order to continue delivering leading edge graphics technologies for the market.

BNP Paribas analyst Eric Chen said TSMC’s customers could accept higher prices if TSMC provided better services and higher-performance chips, however, this would boost expenses of the world’s No.1 contract maker of semiconductors.

Analysts estimate that a factory designed to make chips on 450mm wafers could cost $10 billion or more to build, nearly triple the price of a current 300mm wafer factory. Recently Intel Corp., Samsung Electronics and TSMC agreed to jointly ensure that equipment needed to make chips using 450mm wafers will be standardized, but TSMC said it had no concrete plans to build such a fab.
Ouch.... those gas prices are hurting everyone. If TSMC is indeed going to fab for AMD's CPUs, this is going to hurt.
    
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