Samsung Electronics Co is talking with foundry clients about charging as much as 20 percent more for making semiconductors this year, joining an industry-wide push to hike prices to cover rising costs of materials and logistics.
Contract-based chip prices are likely to rise around 15 percent to 20 percent, depending upon the level of sophistication, people familiar with the matter said.
Chips produced on legacy nodes would face bigger price hikes, while new pricing would be applied from the second half of this year, they said, adding that Samsung has finished negotiating with some clients and is in discussions with others.
Photo: Reuters
Samsung’s decision is a shift from last year’s relatively stable pricing policy, when the industry rushed to raise prices in the wake of a global chip shortage. The company is facing multiple risks such as the war in Ukraine, lockdown measures in China, rising interest rates and inflation. Those are throwing a wrench into business plans typically made a few years in advance.
The move translates into additional pressure on makers of smartphones, cars and game consoles to lift the prices consumers pay. Samsung and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) account for more than two-thirds of global capacity for outsourced chips.
Costs for chipmakers are now rising at about 20 to 30 percent on average on all fronts, from chemicals, gas and wafers to equipment and construction materials.
Contract chip manufacturers including TSMC and United Microelectronics Corp (UMC, 聯電) are telling clients that they plan to raise prices by a mid-to-high single-digit percentage, on the heels of a price hike several months ago.
Industry leader TSMC has told clients that it plans to raise prices by about 5 percent to 8 percent next year, following a 20 percent price hike last year, the Nikkei said.
UMC is also planning another round of 4 percent price hikes in the second quarter. ASML Holding NV — a key supplier to Samsung and TSMC — warned last month of rising pressure on labor costs, in addition to higher material and transportation costs.
The shortage forces customers to prioritize the ability to procure and secure needed chips over prices. Semiconductor makers have been trying to improve profitability, partly by shifting more weight to high-end chips, said Bloomberg Intelligence analyst Masahiro Wakasugi.
“This is an inevitable move for Samsung,” Wakasugi said. “Some customers may accept higher prices if they can get chips earlier than others.”
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