TSMC will reportedly charge more for chips manufactured in the US. Customers will have to pay 20-30 percent higher than what a chip would cost if manufactured in the company’s home country Taiwan. Chips manufactured in its Kumamoto facility in Japan will cost 10-15 percent more.
TSMC is planning to start producing 4nm and 5nm chips at its upcoming semiconductor factory in Arizona, US by the end of 2024. Ahead of that, the company has begun discussions on orders and prices with customers. According to a DigiTimes report (via), the Taiwanese firm has quoted a price 20-30 percent higher than the current pricing structure of its most advanced semiconductors, which are manufactured in Taiwan. Similarly, TSMC also plans to charge 10-15 percent more for chips manufactured in Japan. The company produces older process chips (12nm to 28nm) at its Kumamoto facility
The higher price is because of the high construction and operational costs of factories in the US and Japan, the report states. TSMC doesn’t want to lower its gross margin rate of 53 percent. As such, it is passing the added manufacturing costs to customers. The company’s customers for the Japanese fab have reportedly agreed to its pricing structure, but its American customers are still negotiating. Some are even mulling switching to rival foundries such as Samsung and Intel to keep their costs down. AMD and Qualcomm are reportedly considering switching to Samsung, while Nvidia may go to Intel.
Interestingly, Qualcomm recently switched to TSMC from Samsung because of the latter’s performance and yield issues. However, the Korean firm has significantly improved its 4nm yield rate in recent months. It has also improved its advanced process nodes. So a return to Samsung may not be a bad move for the American fabless chipmaker. It will also save some money in the process. Although there have been rumors of Qualcomm dual-sourcing the production of its Snapdragon 8 Gen 4 between Samsung and TSMC, those plans may not materialize. Time will tell which way the company goes.
TSMC will continue to offer a hefty discount to Apple
TSMC may be risking losing a few customers by increasing its prices for US-made chips, but it surely won’t upset its biggest customer. Apple, which contributes to about 25 percent of the company’s annual revenue, will reportedly continue to get a 20-30 percent discount on the latest process nodes. The priority treatment is because of the close relationship between the two firms. Apple is usually the first to adopt TSMC’s latest nodes, which often cost more and come with risks. It has already booked 3nm chips for the iPhone 15 series. Even with the increased cost, Apple is unlikely to move away from TSMC.
2023-05-05 15:13:07