updated 03:50 pm EDT, Tue May 27, 2008
TSMC raises chip pricing
The industry's biggest in independent contract chip manufacturer, Taiwan Semiconductor Manufacturing Co, announced Tuesday it is considering raising prices for higher-performance chips due to the rising costs of doing business. While the supplier hasn't announced which chips will face the price hike or how much prices would go up, its many customers, including ATI, NVIDIA and VIA, would likewise adjust their prices to reflect the change to the public at large.
Record high inflation in TSMC's home country of Taiwan is the driving force behind the proposed move, reports say, although TSMC has been adamant about its products fetching a premium compared to competitors'. The chips affected would likely be the ones made using advanced and costly processes, as all semiconductor manufacturers face ever-higher costs of producing factories able to produce the latest technologies. Analysts predict a factory capable of making 18-wafer chips such as the one TSMC, Samsung and Intel are jointly developing, would cost more than $10 billion, or about three times the price of a factory building 12-wafer chips.
"Average selling prices have been falling and profits have been under pressure, and we have to work together to create value," said TSMC vice president Jason Chen, who heads up global sales marketing. "We face some structural profit pressure. In the short term, we also face pressure from inflation and oil prices."