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. 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. account for more than two-thirds of global capacity for outsourced chips.
Contract-based chip prices are likely to rise around 15 percent to 20 percent, depending upon the level of sophistication, according to sources, notes Bloomberg. New pricing would be applied from the second half of this year, and Samsung has finished negotiating with some clients, while it is still in discussions with others, the sources said.
Samsung’s decision is a shift from its relatively stable pricing policy last year. That’s when the industry rushed to raise prices in the wake of a global chip shortage. The company is facing multiple macro risks such as the war in Ukraine, lockdown measures in China, rising interest rates and inflation. That’s throwing a wrench into business plans typically made a few years in advance.
A Samsung spokesman declined to comment to Bloomberg.
Manufacturing 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. are warning clients they plan to raise prices by a mid-to-high single digit percentage. That’s on top of a price hike several months ago. ASML Holding NV — a key supplier to Samsung and TSMC — warned last month of rising pressure on labor costs, in addition to higher material costs and transportation costs.
The shortage forces customers to prioritize the ability to procure and secure the chips they need over prices. Semiconductor makers have been trying to improve profitability, partly by shifting more weight to high-end chips, said Masahiro Wakasugi, Bloomberg Intelligence analyst.
“This is an inevitable move for Samsung,” with costs rising on everything from power and equipment to materials and freight, Wakasugi said. “Some customers may accept higher prices if they can get chips earlier than others,” he said.
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