Samsung and TSMC are hiking prices for manufacturing semiconductor chips (again!)
Samsung and TSMC have decided to charge 20% more from their customers in the upcoming market. Their decision is hampering the customers' desires and affecting many other multi-national companies like AMD, Nvidia, Apple, etc.
Many aspects have triggered these circumstances. The most oversimplified explanation of this price hike situation would be the aftermath of the COVID-19 pandemic. Also, there is a lockdown still on the move in China, the country that exports most of the components to create a chip. The price hike of the parts is why Samsung and TSMC are increasing their semiconductors' prices. The interest of people in chips is also snowballing.
If the manufacturers are short to supply according to the demand, it's very likely for them to increase the price of their products. COVID-19 was the reason for many people losing their precious jobs. Some of them went on to become an entrepreneur after losing their way of living. These companies also joining the race may have triggered Samsung and TSMC. And the situation of the war between Russia and Ukraine is also known to all. A world crisis like that is also a reason for this price hike.
Samsung's contract-based chips will increase the price by 15% to 20% for their clients. "This is an inevitable move for Samsung," words Bloomberg LP analyst Masahiro Wakasugi. He also added, "Some customers may accept higher prices if they can get chips earlier than others."
What he said is true. The customers won't complain if they get the supplies earlier than others. The Nvidia graphics card RTX 3000 series was sold out shortly after releasing them on the market. Hence, the price hike was triggered. Now those graphics cards are worth over 50% of their initial price. The same goes for Samsung and TSMC. According to Nikkei Asia reports, Taiwan-based chip manufacturer TSMC informed their clients about a 5% to 8% price hike by 2023 as they had to buy chips from them at a 20% higher price last year. But it's unclear when Samsung will drop its costs and how much they are willing to settle.
With this going on, the prices of mobile phones and PC components will rapidly increase, too. The price hike of graphics cards is still on the move. Samsung and TSMC increasing their semiconductor products' prices will spice up the market even more. The customers would be disappointed because it will happen just when the rumour of the cost of graphics cards drops. They either have to buy those PC components for a very high price or wait for God knows how long.
After increasing the prices of their chips, a 64 GB storage memory chip, Samsung costs about 15 to 20 US dollars. A Samsung 128 GB memory chip will cost the clients roughly 27 US dollars. And finally, 256 GB Samsung memory chip will make the customers pay up to 35 US dollars. The TSMC chips' prices are more or less identical to Samsung chips. Usually, people wouldn't have to spend much money on mobile chips, but purchasing our desired memory chips has become troublesome. All we can do is blame the pandemic for this tragedy in the market.
Still, there is a silver lining for the customers. The effect of the post-pandemic situation is most likely to fade away with time. Also, when the Russia-Ukraine war stops, the companies can get their hands on manufacturing stuff quite quickly.
Due to supply chain issues and price hikes for chips, the demand has been quite frequent. While the pandemic had its effect, shortage of ingredients, supply facilities, and distribution channel delays were the initial reasons for the hike. Even though manufacturing plants are being automated, we hope to see some light on the matter soon.