TO new report of Nikkei Asia suggests that electronic chips / semiconductors could soon see a sharp price increase, inadvertently driving up the price of smartphones and other electronic devices as well.

Semiconductor prices have risen since the fourth quarter of 2020, due to a global supply shortage, but the severity of the situation is gaining ground now as Taiwan Semiconductor Manufacturing Company (TSMC), Apple’s main chip supplier, is is in the midst of increasing its costs in response to inflation across the industry. According to Nikkei, the company’s proposed price increases are believed to be the most significant in a decade.

TSMC dominates more than half of the global chip industry and produces semiconductors for companies like Nvidia and Qualcomm, in addition to Apple.

The Taiwanese company typically charges 20 percent more than its competitors, but a recent change in the industry has seen smaller foundries increase their prices as well, due to “higher material and logistics costs, as well as the race for manufacturers. device manufacturers to ensure adequate supply of chips. “This has prompted TSMC to further increase its prices to keep that cost gap 20 percent higher.

In addition, TSMC’s decision to increase chip prices is also due to its investment of $ 100 billion over the next three years, which will pass these additional expenses on to customers.

“We are all in a big shock and all of our account managers need to talk to our clients to see if we can renegotiate some of the contracts,” said a chip executive. saying Nikkei. “We have not seen TSMC introduce such a large rate increase in more than a decade.”

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TSMC is still processing current orders, and the impact of price increases will be felt considerably more severely next year, probably the first or second quarter, once manufacturing capacity has been expanded and previous orders have been fulfilled.

Smartphone companies are expected to sell their next flagships at a higher price than usual, and the higher price may become ‘normal’ in the future.

Source: Nikkei

 

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