The new round of semiconductor price hikes may be about to begin according to the Star Daily Report on June 17th. After the price increase plan was announced, taiwan semiconductor is about to follow suit. Let's talk about 3nm first. Taiwan Semiconductor's seven major customers (including Apple, MediaTek) have all taken up all the production capacity of 3nm, and the expected orders will be full until 2026. Analysts also said that the prices of Taiwan Semiconductor's advanced process nodes, including 3nm and 5nm, will be adjusted, and the 3nm order is fully loaded with strong operating rate, while 5nm will also appear similar situation driven by AI demand. Previously, CoWoS production capacity had bottlenecked Nvidia's GPU, which accounted for nearly half of Taiwan Semiconductor's advanced packaging production capacity, and AMD and Nvidia were also eyeing the advanced packaging production capacity. The report pointed out that Nvidia did not give up new production capacity, but chose to accept price increases to widen the gap with competitors.$HUA HONG SEMI (01347.HK)$After the price increase plan was announced, taiwan semiconductor is also about to raise its prices.$Taiwan Semiconductor (TSM.US)$Let's talk about 3nm first. Taiwan Semiconductor's seven major customers (including Apple, MediaTek) have all taken up all the production capacity of 3nm, and the expected orders will be full until 2026.

According to the Taiwan Commercial Times today, TSMC's 3nm processing unit's quote price may rise by more than 5%, and the annual quote price of advanced packaging may increase by 10%-20% next year. At the shareholders meeting on June 4th, Wei Jizhong, the newly-appointed chairman of TSMC, signaled his intention to raise prices.

Let's talk about 3nm first. Taiwan Semiconductor's seven major customers (including Apple, MediaTek) have all taken up all the production capacity of 3nm, and the expected orders will be full until 2026.$NVIDIA (NVDA.US)$, $Advanced Micro Devices (AMD.US)$, $Intel (INTC.US)$, $Qualcomm (QCOM.US)$including Apple, MediaTek$Apple (AAPL.US)$and $Alphabet-C (GOOG.US)$Furthermore, analysts said that the prices of Taiwan Semiconductor's advanced process nodes, including 3nm and 5nm, will be adjusted. The 3nm order is fully loaded with a strong operating rate, while the 5nm will also see a similar scenario driven by AI demand.

As TSMC's 3nm supply becomes increasingly scarce, clients, led by Qualcomm, are beginning to increase prices.

Taiwan Commercial Times reported on June 13th that Qualcomm's Snapdragon 8 Gen 4, which is made using TSMC's N3E technology, is priced 25% higher than the previous generation, and this may trigger a trend of price increases. However, industry insiders also pointed out that the price increase is reasonable because the cost per wafer for 3nm is about 25% higher than that of 5nm, and this price increase does not yet consider factors such as the overall number of chips produced and design architecture.

Wccftech also reported on the same day that not only Qualcomm but also Nvidia, Apple and AMD were planning to raise prices of popular AI hardware.

TSMC's 3nm family includes N3, N3E, N3P, N3X, N3A, etc. Among them, N3E was put into mass production in Q4 last year, targeting AI accelerators, high-end smartphones, data centers and other applications; N3P is expected to enter mass production in the second half of this year and will be used in mobile devices, consumer electronics, and networks; N3X and N3A are customized for high-speed computing and automotive customers.

TSMC usually does not comment on news related to individual clients. As for whether prices will rise due to the high demand for production capacity and to reflect value, TSMC emphasizes that "its pricing strategy is always strategy-oriented, rather than opportunity-oriented, and it will continue to work closely with customers to provide value".

In addition to wafer fabrication, advanced packaging is also a popular business for TSMC, especially CoWoS technology.

The AI boom has greatly boosted CoWoS demand, and TSMC's CoWoS monthly production capacity is expected to double from 17,000 to 33,000 pieces in Q3.

Previously, CoWoS production capacity bottlenecked Nvidia's GPUs, which accounted for nearly half of Taiwan Semiconductor's advanced packaging production capacity. AMD, Nvidia, and others are also eyeing the advanced packaging production capacity.$Broadcom (AVGO.US)$, $Amazon (AMZN.US)$, $Marvell Technology (MRVL.US)$The report pointed out that Nvidia did not give up new production capacity, but chose to accept price increases to widen the gap with its competitors.

Moreover, TSMC's supply shortage will persist until 2025. Analysts predict that next year's market demand will exceed 600,000 pieces, while TSMC's supply is estimated to be 530,000 pieces, leaving a gap of up to around 70,000 pieces, making a price increase here imminent.

It is worth noting that Wei Jizhong, TSMC's newly-appointed chairman, had directly stated at the shareholders meeting on June 4th: "Currently, all AI semiconductors are produced by TSMC".

Indeed, there is not only Nvidia that can design AI GPUs, but currently only TSMC can produce AI GPUs. This unique and almost monopolistic position has allowed TSMC to raise prices.

"I did complain to Huang Renxun that his products are too expensive. I do think these products are really valuable, but I also want to show him our own value."

Wei Jizhong hinted at the time that he was considering raising the production price of TSMC's AI chips. After all, considering the high prices at which Nvidia's chips are sold and TSMC's pivotal role in the process, it is natural to think of raising the replacement price.

Editor/Somer