Insider sources told Bloomberg that Samsung is trying to raise chip production prices by 15 to 20 percent.
The business model of chip manufacturers revolves around the service of production capacity. The manufacturer invests in its own factories and produces at the request of customers. Samsung is one of the world’s largest chip manufacturers.
Anonymous insiders told Bloomberg that Samsung is discussing price increases with customers. According to the sources, Samsung wants to increase its production fees by 15 to 20 percent, depending on the complexity of an order. The price increases are said to take effect from the second half of 2022 onwards. According to the sources, some customers have already accepted the increase. Others are negotiating for a better deal.
The increase has several reasons. Last year, Samsung kept production prices stable. This year, economic uncertainty necessitates change. According to Bloomberg, Samsung is struggling with global risks, including the war in Ukraine, lockdown measures in China and inflation. The production costs of chip manufacturers are rising. Chemicals, fuel, wafers and equipment are increasingly expensive.
TSMC, UMC and ASML
Other chip manufacturers are struggling with the same problem. TSMC and United Microelectronics (UMC) recently warned their customers about price increases as well. According to Bloomberg, TSMC’s tariffs shot up by 20 percent in 2021. Between now and 2023, another price increase is to be expected, this time amounting up to 8 percent. UMC is looking at a 4 percent increase in the short term. Then there’s ASML, which warned of rising costs for labour, transport and materials last month.
Bloomberg Intelligence analyst Masahiro Wakasugi is convinced that the price increases are carefully timed. In theory, customers of chip makers do not have to agree to new contracts. On the other hand, if demand is high enough, a party has no choice. The chip shortage is easing, but delayed deliveries remain common. According to Wakasugi, some customers are accepting price increases in hopes of receiving their orders more quickly.