TSMC and Samsung to be Planning and Considering Price Increases (from 8-30%)

[BiG StroOnZ]

Summary

The TSMC and Samsung foundries are planning on price increases. For TSMC they are expecting the price increases in 2023, for Samsung the price increases sometime in the second half of 2022. Price increases between the two will vary from 8-30% according to reports.

 

 

 

Quotes

Quote

Reports of TSMC planning price hikes in early 2023 are starting to appear. TSMC has supposedly already contacted its customers to notify them about the upcoming price increase, to give them as much time as possible to make any changes to their plans, if needed. The price increase will vary depending on the node in question, but is reported to be somewhere between five and eight percent according to the Nikkei. 

 

Part of the increase is also related to TSMC's rapid expansion that's going on at the moment. TSMC is expected to invest some US$40-44 billion this year alone on fabs and new equipment. This is a fairly small price increase compared to the big increase TSMC implemented in August 2021, where some nodes saw price hikes of up to 20 percent.

 

~

 

It looks like Samsung Foundry is set to follow suit with a similar price hike as TSMC. Depending on the node, the company is said to be looking at increases of between 15 to 20 percent. The price increases are said to come into effect sometime in the second half of 2022, so more than six months after TSMC's price hike. The costs to produce chips are said to be increasing by 20 to 30 percent across the board, no matter if we're talking materials needed to produce integrated circuits, or building new factories, according to Bloomberg. 

 

The company is hoping to overtake TSMC in the future and invested more than US$36 billion in 2021 alone to expand its foundry business with new fabs and EUV machines.

 

My thoughts

Well this is a real bummer, right when we started to see GPU prices equalizing it appears that prices for all gaming products are still to go up (directly from the fab though). This will prove to be an issue for people trying to build new PCs, because this doesn't even take into account the behavior we've been seeing regarding prices in recent history (scalping, inflation, raw materials and lack of availability). 

 

Sources

https://www.engadget.com/samsung-raising-chipmaking-prices-131536580.html 

https://www.tomshardware.com/news/tsmc-warns-clients-of-up-to-9-price-hike-in-2023

https://www.techpowerup.com/294753/tsmc-said-to-be-planning-price-increases-in-2023

https://www.techpowerup.com/294837/samsung-foundry-considering-up-to-20-percent-price-hikes

 

[PeachGr]

I don't think that 8-30% of price increase, will affect GPU price by 8-30%. The price of silcon is a small portion of the total cost of it, but I m sure that Nvidia and AMD will use this excuse to sell higher

[Alex Atkin UK]

18 minutes ago, PeachGr said:

I don't think that 8-30% of price increase, will affect GPU price by 8-30%. The price of silcon is a small portion of the total cost of it, but I m sure that Nvidia and AMD will use this excuse to sell higher

Its the price of silicon itself (rather than the process of making the chip) that is likely the reason for this.

Kinda inevitable when it seems there is a monopoly for silicon supply causing a shortage.

[porina]

20 minutes ago, PeachGr said:

I don't think that 8-30% of price increase, will affect GPU price by 8-30%. The price of silcon is a small portion of the total cost of it, but I m sure that Nvidia and AMD will use this excuse to sell higher

I'm sure I've seen attempts at breaking down the cost of a typical desktop GPU in recent times but I've been unable to find it to get some better numbers. Still, I wouldn't be surprised if silicon based components made up the majority of the cost of a finished GPU, at least at the higher end. The big ticket items will probably be the GPU die itself and VRAM, supplemented by other silicon like power controllers and similar. The small stuff is pretty much insignificant even if there can be a lot of them. Boards and cooling isn't terribly expensive. Packaging isn't really significant either. Maybe the low end will be more resistant as non-silicon parts may contribute more, but for the higher end of interest to most will be impacted. And I wouldn't be surprised if non-silicon parts also go up anyway.

[GoodBytes]

The cost of a top of the line consumer mass produced processor is not expensive. Maybe 40-50$ USD. What costs a the most is the billions it is required in R&D. Then the marketing, operating expenses of not only the chip manufacturers, but in the case of GPUs, the board manufacturers, who also need to do R&D, marketing, pay company operations, deal with warranty coverage, have an MSRP that give retailers and warehouse/distribution channel money, and also they need to make money.

 

All in all, the price goes up real fast. The part itself, not expensive.

 

Customer loose due to price rounding. A product is never sold as 782.43$. It will be sold as: 799.99$ So this price increase may cost consumers, us, pay 20 to 50$ more depending on the product.

[PeachGr]

9 minutes ago, GoodBytes said:

billions it is required in R&D

I will agree that most of it's price is rnd, and also the "fashion" that we pay as top of the edge adopters, but rnd is divided by the huge amount of units, where the cost of  the materials is somewhat constant. For example if silcon is 50$, is about the same no matter what is the amount, but rnd is getting lower if you produce more units. 10 million $ for 1000 GPUz, is 1000 per unit, but 10 million $ for 10 million GPUz is 1$ per unit

[Senzelian]

Chips are already expensive enough. Look, they're already stealing the dies out of the TSMC logo!

[AnonymousGuy]

8 hours ago, GoodBytes said:

The cost of a top of the line consumer mass produced processor is not expensive. Maybe 40-50$ USD. What costs a the most is the billions it is required in R&D. Then the marketing, operating expenses of not only the chip manufacturers, but in the case of GPUs, the board manufacturers, who also need to do R&D, marketing, pay company operations, deal with warranty coverage, have an MSRP that give retailers and warehouse/distribution channel money, and also they need to make money.

 

All in all, the price goes up real fast. The part itself, not expensive.

 

Customer loose due to price rounding. A product is never sold as 782.43$. It will be sold as: 799.99$ So this price increase may cost consumers, us, pay 20 to 50$ more depending on the product.

Raw material costs is probably <$20. I saw the number recently but I don’t remember it. TSMC charges several thousand per wafer on leading nodes. 

[Quackers101]

this is why they should go from chips to crackers.

now its just to wait for all those intel fabs, just have elon buy one for the space race. jk

[RejZoR]

13 hours ago, PeachGr said:

I don't think that 8-30% of price increase, will affect GPU price by 8-30%. The price of silcon is a small portion of the total cost of it, but I m sure that Nvidia and AMD will use this excuse to sell higher

They always do. Basically everyone in the production chain of products will jack things up by 8% each.

[xtroria]

It could be scary if they look at oil pricing and OPEC+ and goes "ohh we can do that as well"

[wanderingfool2]

13 hours ago, GoodBytes said:

The cost of a top of the line consumer mass produced processor is not expensive. Maybe 40-50$ USD. What costs a the most is the billions it is required in R&D. Then the marketing, operating expenses of not only the chip manufacturers, but in the case of GPUs, the board manufacturers, who also need to do R&D, marketing, pay company operations, deal with warranty coverage, have an MSRP that give retailers and warehouse/distribution channel money, and also they need to make money.

 

All in all, the price goes up real fast. The part itself, not expensive.

 

Customer loose due to price rounding. A product is never sold as 782.43$. It will be sold as: 799.99$ So this price increase may cost consumers, us, pay 20 to 50$ more depending on the product.

I'd say it depends really.

 

I mean in 2021 Nvidia spent $5.2 billion in R&D costs.  The cost of building/shipping the product was $9.4 billion.  While R&D does make up a decent amount of the pricing, things like this can cause a decent increase in prices as well (and it applies to the older cards still being manufactured as well).  So more likely to have the lineup facing the more profitable products if there is an increase in manufacturing.

 

Actually, to put things in perspective as well, the sales, general and admin expenses were $2.1 billion.  So depending on the year the staffing can take nearly the same priority then (e.g. 2021 R&D at Nvidia was only $3.9 billion, but $6.3 billion in building the product)

 

Either way, while it won't have the one to one 8-30% higher cost it still might have a linear relationship, it still will come into play as NVidia tries protecting the shareholder value

[Stahlmann]

At this point they can do with their prices what they want. What are their customers gonna do? Buy from someone else? Invest billions into building ther own fabs?

 

16 hours ago, PeachGr said:

I don't think that 8-30% of price increase, will affect GPU price by 8-30%. The price of silcon is a small portion of the total cost of it, but I m sure that Nvidia and AMD will use this excuse to sell higher

If the last 2 years have shown us anything, then it's that companies like these things to excuse their own price hikes even when they're not impacted that much. There are many companies that use current events around the world and raise their prices while operating as usual, but use the same excuse as others that actually suffer from shortages. That is very apparent with many products currently being made in the EU and with everything going on in Ukraine.

[TexasBulldog74]

Everyone "Im going to wait for 4000 series" beause cards are $80 over MSRP currently are going to be frustrated lol

[porina]

A rough indication of possible cost to AMD for getting GPUs made at TSMC: (I nearly did this with nvidia but I don't have numbers for Samsung)

 

Area of Navi 21: 520 mm²

TSMC 7nm defect rate: 0.09/cm²

Max number of dies from a wafer area: 135

Max number of whole dies from a wafer: 103

Estimated good dies after defect rate: 66

Cost of TSMC 7nm: $5859.28

Cost per good die assuming above: $88.78

 

That number will be wrong for many reasons:

1, yield is based on defects only, and doesn't factor in binning

2, 7nm pricing is from a presentation in 2016 - would it go up or down since then? TSMC didn't record 7nm revenue until 2018, with AMD's first CPU using it in 2019. For comparison, average TSMC wafer was $4007 in 2021 and <=7nm wafers were less than 50% of units, so it would still be somewhere above that. TSMC 5nm wafer cost was  reported to be $16988 in 2020.

 

Navi 21 is used in 6800 and above, so representative of a high end GPU. 

 

Sources:

 

 

https://caly-technologies.com/die-yield-calculator/

 

 

[RejZoR]

1 hour ago, TexasBulldog74 said:

Everyone "Im going to wait for 4000 series" beause cards are $80 over MSRP currently are going to be frustrated lol

2 years old products that are still $80 over their original MSRP from 2 years ago...

 

There, I fixed it for you. Also MSRP at this point is some fictitious made up value that literally means nothing. And you can be assured RTX 4000 series (and RX 7000) will come with jacked up prices from the get go. Just because they can and because everyone seems to have accepted it from consumer side of things given how people were paying even $500 more for graphic cards.

 

I also don't know how suddenly production couldn't keep up with supply of electronic devices. Somehow demand for them went up 500 times. Why again? Were they even selling anything before stupid corona? Seems like they haven't.

[Doobeedoo]

Oh please I hope building a new PC won't be just an idea yet again over time. 

[williamcll]

8 hours ago, Quackers101 said:

this is why they should go from chips to crackers.

now its just to wait for all those intel fabs, just have elon buy one for the space race. jk

Teslas are still relying on TSMC chips because the embedded intel ones were awful.

[AlTech]

On 5/16/2022 at 8:27 AM, Stahlmann said:

At this point they can do with their prices what they want. What are their customers gonna do? Buy from someone else?

In theory Global Foundries still exists as an option for things that don't need cutting edge nodes; their most recent node being 12nm FinFET iirc cos they cancelled their 7nm node.

 

Intel's fab business also exists in theory but that's probably insanely expensive.

On 5/16/2022 at 8:27 AM, Stahlmann said:

Invest billions into building ther own fabs?

 

If the last 2 years have shown us anything, then it's that companies like these things to excuse their own price hikes even when they're not impacted that much. There are many companies that use current events around the world and raise their prices while operating as usual, but use the same excuse as others that actually suffer from shortages. That is very apparent with many products currently being made in the EU and with everything going on in Ukraine.

Unfortunately yes.

[Stahlmann]

1 hour ago, AluminiumTech said:

In theory Global Foundries still exists as an option for things that don't need cutting edge nodes; their most recent node being 12nm FinFET iirc cos they cancelled their 7nm node.

 

Intel's fab business also exists in theory but that's probably insanely expensive.

Unfortunately yes.

The next problem is that their silicon is optimized for the note they're currently using (afaik). They can't just use another node without investing a huge amount of work.

[GhostRoadieBL]

A 5% change in material cost shouldn't effect final product consumer cost, that is based on market factors more than the components themselves.

If (perfect world theory) noone bought 4000 series gpus, Nvidia would be forced to lower the price until people bought the cards. Even at a loss, this is also why console manufacturers often take major losses on their hardware and make it up in high margin games (ever notice digital purchase games cost the same as physical copies?) console buyers are competitive at $3-400 any more and it's not going to sell, same with the Nintendo Switch and steamdeck. These have drifted in price higher and "pro" models often market a higher price to cause the subtle drift but that's just how the market shifts.

 

 

[Alex Atkin UK]

On 5/16/2022 at 5:56 AM, Quackers101 said:

this is why they should go from chips to crackers.

now its just to wait for all those intel fabs, just have elon buy one for the space race. jk

No doubt Elon would claim he could open a fab tomorrow "its not that hard".