Smartphone price will rise as TSMC increase chip price

Smartphone price will rise as TSMC increase chip price

TSMC (Taiwan Semiconductor Manufacturing Company) notified customers about the increase in prices for their products. TSMC is the world’s largest manufacturer of processors, video chips and microcontrollers for mobile devices, it assembles chips for Qualcomm, Apple, AMD (and earlier also for Huawei).

TSMC will increase selling prices by about 10-20%, and since the processor is one of the most expensive components in a device, we can expect an increase in retail prices for smartphones, tablets and other electronic goods.

TSMC indicates that products manufactured using the most advanced technologies (7 nm process technology and below) will rise in price by 10%. This includes chips for flagship and sub-flagship devices. Chips assembled using the 16 nm process technology and higher will immediately rise in price by 20%. They are used in inexpensive technology, which means that prices for it will rise more significantly.

TSMC’s share of the semiconductor market is 56% – more than three times that of its closest competitor, Samsung. The manufacturer justifies the rise in prices by the fact that over the past six months, the demand for electronic components has reached a historically record level, it was necessary to increase production volumes, and this leads to additional risks and wear and tear of equipment at the factory. Following TSMC, prices may be raised by other chip manufacturers as well.

It turns out a paradoxical situation: electronics will rise in price due to the fact that too much of it is produced. It seems that it should be the other way around, because overproduction leads to lower prices.

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