TSMC to raise prices by up to 15% due to’old semiconductor shortage’

Input 2021.01.26 14:11

In the global automotive market, the supply and demand of automotive semiconductors is not smooth, and TSMC, the world’s No. 1 foundry (consignment production of semiconductors), has decided to raise the price of automotive semiconductors up to 15%. It is predicted that the automaker industry, which is gradually seeking out the demand that has been lost since the novel coronavirus infection (Corona 19), will deteriorate profits from this price increase.

According to foreign media reports such as the Nihon Keizai (Nikkei) newspaper on the 26th, TSMC is considering raising the price of semiconductors for automobiles in stages from February to March. Germany’s Infineon and NXP of the Netherlands, which are the leaders of global automotive semiconductors, are entering into price negotiations with the finished car industry due to the shortage of semiconductors.

The industry estimates that TSMC is responsible for about 10% of the world’s automotive semiconductors. Although the proportion itself is not high, considering the symbolism of being the No. 1 foundry, TSMC’s price hike is highly likely to lead to a series of price hikes for latecomers.

In recent years, automotive semiconductors are disrupting the production of finished cars due to a lack of supply. Accordingly, it is reported that the governments of the US, Germany and Japan, which are major automobile producers, are directly requesting TSMC to increase the production of automotive semiconductors. Nikkei reported that “the right to decide the price of auto parts is passing over to semiconductor suppliers.” It is a different paradigm from the past when automakers took the lead in price negotiations with parts makers based on economies of scale.

The shortage of automotive semiconductors and resulting price hikes are expected to lead to worsening profits in the entire auto industry. Nikkei expects that a 10% increase in automotive semiconductor prices will increase automobile production costs by about 0.18% and reduce operating profit by 1%.

An industry insider said, “I don’t know if (the semiconductor shortage phenomenon) is temporary or will take a prolonged phase, but the fact that semiconductor suppliers have raised prices is likely to lead to worsening profits and higher car prices.” As the semiconductor market is expected to increase significantly, large semiconductor companies such as Samsung Electronics are expected to benefit.”