TSMC plans to increase 3nm and 5nm Price by another 3%~5%

Taiwan Semiconductor Manufacturing Company (TSMC) is reportedly planning to increase prices by 3%-5% for its advanced 3nm and 5nm semiconductor manufacturing processes, as well as its CoWoS advanced packaging technology, amid strong demand for cutting-edge chips, particularly in the AI sector.

TSMC 3nm and 5nm Price Hike

The latest reports indicate that TSMC plans to raise prices for its advanced 3nm and 5nm semiconductor manufacturing processes by 3-6%. This price hike comes at a time when the company is experiencing nearly full utilization for its 3nm capacity until 2025 and 2026. The increase reflects the high demand for cutting-edge chip technologies, particularly in the rapidly growing AI sector. TSMC's dominant market position allows it to implement such price adjustments, as it remains the primary supplier for high-profile customers like Apple and NVIDIA.

CoWoS Packaging Price Increase

Advanced packaging technologies, particularly Chip-on-Wafer-on-Substrate (CoWoS), are set to see a significant price increase of 5-10%. This uptick in pricing reflects the growing importance of advanced packaging in enhancing chip performance, especially for AI applications. TSMC's packaging capacity is expected to nearly double by the third quarter of this year, reaching 33,000 wafers per month from the current 17,000.Notably, approximately half of TSMC's advanced packaging capacity is dedicated to NVIDIA's products, with AMD following as the second-largest customer. The demand for packaging is projected to reach about 600,000 wafers next year, exceeding TSMC's capacity of 530,000 pieces, which further justifies the price increase.

Reasons for Price Increases

The price hikes for TSMC's advanced manufacturing processes and packaging technologies are driven by several factors:

• Strong demand for AI chips has led to nearly full utilization of 3nm capacity until 2025-2026

• Ongoing supply chain constraints necessitate significant investments in capacity expansion

• Advanced packaging, crucial for AI GPU performance, faces a demand-supply mismatch with projected demand exceeding capacity by 70,000 wafers in 2025

• TSMC's dominant market position allows it to adjust prices while maintaining its customer base

These increases reflect the growing importance of cutting-edge semiconductor technologies in the AI-driven tech landscape and TSMC's need to balance capacity investments with profitability.

Impact on Customers and Products

The anticipated price increases for TSMC's advanced manufacturing processes and packaging technologies are likely to have a ripple effect on the tech industry. Customers such as Apple, NVIDIA, and AMD may face higher production costs, potentially leading to increased prices for end products like smartphones, computers, and AI hardware.However, given the strong demand for cutting-edge chips, particularly in the AI sector, most customers are expected to absorb these costs to secure access to TSMC's advanced manufacturing capabilities. This situation underscores the critical role of TSMC's technologies in driving innovation and performance in the rapidly evolving AI and computing landscape.

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