Electronics are set to get even more expensive as chip giants hike their prices

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  • Analysts told CNBC that Taiwan Semiconductor Manufacturing Co, the world’s biggest foundries including Samsung and Intel, are looking at further hikes in prices.
  • Foundries are raising their prices because it is becoming more expensive for them to fund their growing operations.
  • Forrester analyst Glenn O’Donnell told CNBC that rising chip prices shouldn’t surprise anyone in the current economic climate, adding that he expects prices to rise by about 10-15%, or roughly 10%. But will be in line with inflation.

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According to analysts, products that rely on semiconductors are set to get even more expensive as chip foundries prepare to raise their prices.

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Analysts told CNBC that Taiwan Semiconductor Manufacturing Co, the world’s biggest foundries including Samsung and Intel, are looking at further hikes in prices.

“Foundries have increased prices by 10-20% over the past year,” Bain Semiconductor analyst Peter Hanbury told CNBC. “We expect prices to increase further this year, but small (ie 5-7%).”

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Foundries are increasing their prices partly because they can, but also because it is becoming more expensive for them to fund their growing operations.

“used in chemistry [chip] Manufacturing has increased by 10-20%,” Hanbury said. “Similarly, the labor required to build new semiconductor facilities has also seen a decrease and wage rates increase.”

TSMC warned customers for the second time in less than a year that it was planning to raise prices, Nikkei Asia told Last Tuesday, citing people gave information about the matter.

The Hsinchu-headquartered firm is reportedly planning to increase its prices by single-digit percentage points. It has cited rising inflation concerns, rising costs and its own expansion plans as the reason for the price hike.

A TSMC spokesperson told CNBC that the company did not comment on its pricing.

Elsewhere, rival Samsung is set to increase its chipmaking prices by up to 20%, according to a Bloomberg report last Friday. Samsung did not immediately respond to CNBC’s request for comment.

“With the continued shortage of semiconductor chips, manufacturers are able to charge a premium as customers continue to push for secure supply,” Hanbury said, adding that his firm expects shortages to begin on some chips by the end of the year. Will go

Intel did not immediately respond to CNBC’s request for comment.

rising with inflation

Forrester analyst Glenn O’Donnell told CNBC that rising chip prices shouldn’t surprise anyone in the current economic climate, adding that he expects prices to rise by about 10-15%, or roughly 10%. But will be in line with inflation.

Over the past two years, the coronavirus pandemic has helped bridge the global chip shortage.

“Chipmakers face their own escalating supply issues that have been exacerbated by the Ukraine war … and demand remains high, while supply is constrained,” O’Donnell said. “Energy prices, including electricity, also fluctuate. Chipmaking requires huge amounts of electricity.”

Despite the acute cost of living crisis, companies that integrate chips into their products may have to begin passing the costs on to consumers.

Hanbury said, “Increased prices for chips will add to the stress for downstream customers, who will either need to pass on these price hikes to their customers, which will be difficult in the current environment, or accept lower profitability.” “

O’Donnell said he expects PCs, cars, toys, consumer electronics, appliances and many other products to be more expensive.

“Margins are already tight on such products, so they have no option but to increase the prices,” he said.

Syed Alam, global semiconductor lead at Accenture, told CNBC that the magnitude of any price increase will depend on the share of semiconductor costs in the overall product cost. It will also depend on the ability of manufacturers to cut costs in other areas and the competitive landscape of each product category, he added.

“Given these factors, products using more advanced chips such as GPUs (Graphics Processing Units) and high-end CPUs (Central Processing Units) are likely to be priced higher,” Alam said.

But demand is beginning to dwindle in some areas and they will struggle to pass these cost increases on to their customers, Hanbury said. “For example, the smartphone market has seen a decrease in demand, so they may not be able to deliver as much of these increases,” he explained.

Credit: www.cnbc.com /

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