Global chip manufacturer, TSMC, has notified its customers, like AMD, Nvidia, Qualcomm, Apple, about the price hike. Taiwan semiconductor manufacturing company will increase the production cost of most of the process technologies. Undoubtedly, the companies will transfer the increased cost to the customer in their products like CPU, GPU, Smartphones.
TSMC plans to increase prices by about 10% for its 7nm (N7) or less advanced process nodes, whereas a 20% price increase for 16nm or thicker process nodes. Most of the modern silicon chips use TSMC 7nm nodes and later will use TSMC 5nm (N5). And 10% production cost increase will significantly increase the overall customer value.
As reported by TSMC, its 49% revenue is coming from 7nm (31%) and 5nm (18%), and 25% revenue is from 16nm (14%) and 28nm (11%).
Most of the silicon is for smartphones and computer parts. That means cost increase would impact these two platforms heavily.
Prices are already not normal due to silicon shortages and other factors. In addition to this, a hike in the prices of TSMC, the world’s largest foundry, may make the situation worse.
Currently, silicon shortage is every sector that uses silicon chips. From computers to automobiles, it’s a global chip shortage. Gradually, things are going back on track, and stocks are normalizing. TSMC and other silicon manufacturers have started building new fabs to fulfil the upcoming demands.
Manufacturing new silicon fabrication facilities required billions of dollars. There may be many reasons for the price hike, but more revenue, new fabs, chip shortage are part of it.
Impact on CPU, GPU prices
In computing, many companies use TSMC foundry for chips like AMD, Nvidia, etc. Intel planned to use TSMC N6 process node for its upcoming Intel ARC GPU. However, Intel uses its own foundries for CPUs. Nvidia also uses Samsung foundry, but TSMC is in priority.
AMD majorly uses a TSMC 7nm process node for the CPUs and GPU and later will use 5nm. Ryzen 5000 CPU and the upcoming 6000 CPU may cost more than we expected. Also, AMD has planned to use 3D stacking to give extra cache in the CPU.
The mobile SoC market for TSMC is huge. Smartphone consumption is increasing rapidly globally, so is the number of SoCs. Major chip designers like Qualcomm, MediaTek, Apple rely on TSMC. And most of them are using advance 7nm or lower process nodes.
It remains to be seen how much the increased production cost affects the price of CPU, GPU, mobile SoC, etc. Either the companies will absorb the price hike in them or pass it on to the customer. No company would want to hurt its profit margins.
So, incoming times we may have some price hikes.