With expanded investment in artificial intelligence (AI) chips, the formula for setting prices in the foundry (contract chip manufacturing) market is changing. TSMC, the world's largest foundry, raised prices for advanced nodes last year and is doing so again this year, and Samsung Electronics has also increased supply prices for some nodes. Analysts say the foundry market, long marked by fierce price competition to win clients, is shifting to a supplier's market. Industry watchers also note that the structure in which market supply and demand, rather than the maturity of a process, determines prices is strengthening.
According to industry sources on the 9th, TSMC recently notified major clients such as Nvidia, Apple and AMD that it plans to raise wafer supply prices by 5% to 10% not only for cutting-edge nodes like 3-nanometer (nm) and 5-nm, but also for the 7-nm process used to produce high-performance chips.
The reason the industry is focused on this price increase is that the way prices are set is changing more than the size of the hike. Typically in the foundry sector, even if high prices are charged at the start of a new node, it has been common to freeze or gradually adjust prices once the Production yield stabilizes and productivity improves. Except when generations shift, it was rare to raise prices again for the same node.
But the mood has shifted since the expansion of AI investment. Orders for AI Semiconductor from global big tech companies, including Nvidia, are surging, and capacity for advanced nodes is failing to keep up with demand. On top of that, the expense of developing next-generation nodes such as 2-nm and the burden of investing in advanced equipment are growing, leading to a structure in which market supply and demand and investment expense, rather than the maturity of a process, drive pricing. The industry sees a trend, led by TSMC, of readjusting prices for the same node in line with market conditions.
This trend is also seen in the Samsung Electronics foundry business. Samsung Electronics is understood to have raised supply prices by around 15% for new clients, focusing on high-demand advanced nodes such as 4-nm and 5-nm and some automotive 8-nm nodes.
However, in the case of Samsung Electronics, analysts say it is less a broad price-hike stance like TSMC's and more about normalizing prices for certain nodes where demand is concentrated. The industry believes that increased demand for AI Semiconductor and automotive chips has improved supply conditions for some nodes, boosting pricing power compared with before.
The market also sees this shift as potentially changing the revenue structure of the foundry industry. In the past, companies with technological strength secured pricing power in the most advanced nodes, but since AI investment expanded, supply shortages have persisted, further strengthening manufacturers' price-setting power.
Foundry price hikes are likely to translate into higher expense across the semiconductor ecosystem. In addition to wafer prices, rising HBM (high bandwidth memory) prices and shortages in advanced packaging are expected to push up manufacturing costs for companies such as Nvidia, Apple and AMD. Over the long term, it could affect not only AI server build-out expense but also the prices of finished products such as smartphones and PCs.
A semiconductor industry official said, "In the past, foundries tended to engage in price competition to secure clients, but in the AI era, as supply of advanced nodes fails to catch up with demand, pricing power is shifting to the supplier side," and added, "As long as the AI investment cycle continues, the trend of price hikes centered on advanced nodes is likely to persist."