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TSMC’s growing influence has allowed it to hike prices by 23% in three years
All data on the unit cost of one silicon wafer processed by TSMC according to different technical processes are of unofficial origin and may be far from the truth. At the same time, there are no fewer people who want to conduct such an analysis. Bloomberg claims TSMC has raised prices for its services by 23% over the past three years.
Image source: Bloomberg
In the third quarter, TSMC was able to increase its net profit by 36%, exceeding the expectations of analysts, by the end of the current year it expects to increase its revenue by more than 30%. Capital expenditures are also growing along the way, they have already reached $ 17 billion. The company generates more money, but also spends more, since the development of new technical processes requires more and more expenses.
The author of one of the columns on the pages of Bloomberg Tim Culpan (Tim Culpan) determined the average cost of a TSMC silicon wafer in 300 mm equivalent. In the past quarter, according to his data, it was $ 3747 apiece. A year ago, the cost was 9% lower, and in three years the average price increased by 23%. Tellingly, for the period from 2021 to 20221, the average selling price of a silicon wafer grew by an average of 1.6% per year. According to the primary source, the progress of recent years to a greater extent reflects not an increase in TSMC’s expenses, but an increase in demand for its services. The company was able to raise prices as demand exceeds supply and consumers are willing to pay more without hesitation.
TSMC currently controls about 54% of the global semiconductor manufacturing contract market, according to TrendForce. Mass production of 7nm products is generally available only to TSMC customers, since Samsung in this regard is only trying to reach its design capacity. As you can see from the results of the quarterly report, now TSMC receives more than a third of all revenue from the sale of 7-nm products. It has continuously increased production volumes throughout the year, but there is still no confidence that the company can fully meet the demand for the relevant services. The pandemic spurred demand for most electronic components; in these conditions, even TSMC’s competitors like UMC do not hesitate to raise prices, so an increase in the average selling price of a silicon wafer is natural.