Source: Brokerage China Author: Zhou Le
TSMC sends a heavy signal.
On June 17, according to Taiwan media "Commercial Times" report, in the case of insufficient capacity, TSMC will adjust prices for 3nm, 5nm advanced processes and advanced packaging. Among them, the price of 3nm OEM by TSMC may increase by more than 5%, and the price increase of advanced packaging in the next year will be 10%-20%.
As of press time,$Taiwan Semiconductor (TSM.US)$US stocks rose more than 2%, reaching a new historical high.
It is worth noting that this wave of price increases has begun to spread downstream to the industrial chain. According to the supply chain news,$Qualcomm (QCOM.US)$Snapdragon 8Gen4 is created with TSMC N3E, and the quote for this generation has increased by 25% compared to the previous one, which may trigger a follow-up price increase. According to wccftech, it’s not just Qualcomm that has raised the prices,$NVIDIA (NVDA.US)$, $Advanced Micro Devices (AMD.US)$also plans to raise the prices of hot AI hardware.
At the same time, a new round of semiconductor price increases may be about to begin. A report released by Morgan Stanley showed that the utilization rate of the company's foundry has exceeded 100%, and it is expected that wafer prices may be raised by 10% in the second half of this year. According to institutional tracking, the adjustment of wafer OEM prices has spread to power semiconductor manufacturers, and power semiconductor manufacturers have ushered in a wave of price increases this year.$HUA HONG SEMI (01347.HK)$TSMC: price hike. On June 17, according to Taiwan media "Commercial Times" report, in the case of insufficient capacity, TSMC will adjust prices for 3nm, 5nm advanced processes and advanced packaging. The price of 3nm OEM by TSMC may increase by more than 5%, and the price increase of advanced packaging in the next year will be 10%-20%.
TSMC: Price Increase.
On June 17, according to Taiwan media "Commercial Times" report, in the case of insufficient capacity, TSMC will adjust prices for 3nm, 5nm advanced processes and advanced packaging.
Among them, the price of 3nm OEM by TSMC may increase by more than 5%, and the price increase of advanced packaging in the next year will be 10%-20%.
Currently, TSMC's 3nm production capacity has been completely covered by Nvidia, AMD, Intel, Qualcomm, MediaTek, Apple and Google, and the expected order will be full until 2026. TSMC’s 5nm process node continuously receives AI semiconductor orders, and the capacity utilization rate is also high.
Some analysts stated that the prices of TSMC's advanced process nodes including 3nm and 5nm will be adjusted. The 3nm order is strongly active and the utilization rate is full, and the situation of 5nm will be similar driven by AI demand.
The TSMC 3nm family includes N3, N3E, N3P, N3X, N3A, etc. Among them, N3E started mass production in the fourth quarter of last year, targeting AI accelerators, high-end smart phones, data centers and other applications; N3P is expected to start mass production in the second half of this year and will be used in mobile devices, consumer electronics, internet communication, etc.; N3X and N3A are customized for high-speed computing and automotive customers.
According to Taiwan media "Commercial Times", quoting supply chain sources, the Snapdragon 8Gen4 by Qualcomm is made with TSMC N3E, and the pricing for this generation has increased by 25% compared to the previous one. However, the industry pointed out that the price increase is reasonable, because compared with 5nm, the cost of each wafer of 3nm is about 25% higher, and this increase has not yet considered overall chip quantity, design architecture and other factors.
As TSMC's 3nm supply becomes increasingly scarce, clients, led by Qualcomm, are beginning to increase prices.
According to wccftech, it’s not just Qualcomm that has raised the prices. Nvidia and AMD also plan to raise the prices of hot AI hardware.
According to wccftech report, it is not only Qualcomm that has raised prices, Nvidia and AMD also plan to raise the price of popular AI hardware.
Prior to this, Guo Mingchi, an analyst at TF International Securities, issued a report stating that the price of SM8750 (Snapdragon 8Gen4), which will start mass production in the second half of this year, is about 25%-30% higher than that of the current flagship chip SM8650 (Snapdragon 8Gen4), ranging from $190 to $200.
Why raise prices?
Analysts pointed out that the main reason for the price increase is the use of Taiwan Semiconductor's latest and costly N3E process. Benefiting from the boost of AI, the shipment volume of SM8750 is expected to grow by a high single-digit percentage compared with SM8650. Product structure, 10-30 billion yuan products operating income amounted to 401/1288/60 million yuan respectively.
Not long ago, Nvidia CEO Huang Renxun stated during the Taipei Computer Show that TSMC's price is too low to fully reflect its huge contribution to the global technology industry.
It is worth noting that Wei Zhejia, the newly appointed chairman who has just taken over TSMC, directly announced at the shareholders' meeting on June 4th that all AI semiconductors are currently produced by TSMC.
Wei Zhejia implied at that time that he was considering raising the production price of TSMC's AI chips. After all, considering the high price at which Nvidia chips are sold, coupled with the important role played by TSMC in their production, it is natural to think of raising the substitute price.
In addition to wafer fabrication, advanced packaging is also a popular business for TSMC, especially CoWoS technology.
The AI wave has greatly boosted CoWoS demand, and TSMC's monthly CoWoS production capacity in the third quarter is expected to increase from 17,000 to close to 33,000, nearly doubling.
TSMC's advanced packaging production capacity supply may continue to fall short of demand until 2025. Analysts predict that next year's market demand will exceed 600,000 pieces, and TSMC's next year's supply is expected to be 530,000 pieces, still leaving a gap of as much as 70,000 pieces. The price of advanced packaging is on the rise.
Price hikes are imminent.
All signs indicate that a new round of semiconductor price hikes may be imminent.
According to a report released by Morgan Stanley, the utilization rate of Hua Hong Semiconductor's wafer factory has exceeded 100% currently and it is expected to increase the price of wafers by 10% in the second half of this year.
According to institutions tracking the industry, the adjustment of wafer processing prices has spread to power semiconductor manufacturers, and since this year, power semiconductor manufacturers have seen a wave of price hikes. Among them, Sanan Optoelectronics raised the price of its entire series of products by 10%-20%, Lianchuang Electronics raised the price of its entire series of products by 10%-18%, HighGrid Micro raised the price of its entire product line by 10%-20%, and Jiejie Micro raised the price of its TrenchMOS by 5%-10%.
GTJA's latest report pointed out that the bottom of the semiconductor cycle has appeared, inventory has returned to a reasonable level, and prices of elements ranging from electronic components to wafer processing are gradually rising, and the marginal repair of prices continues to strengthen.
From the inventory side, according to the comparison with the first quarter of 2024 and the same period in history, several core semiconductor design companies have returned to the level of the last semiconductor cycle around the first quarter of 2019, indicating that inventory is bottoming out and a reversal is imminent.
Looking at prices, various product prices have risen to varying degrees since the first quarter of 2024, with bulk storage prices showing the most significant increase, gradually spreading to niche storage such as SLCNAND and NOR in the first quarter, and CCL and power devices are undergoing minor price hikes.
According to data from distributors' websites such as Positive Energy Electronics, the prices of main chip part numbers such as PMIC and MCU have gradually reached bottom. According to the data from Core Eight Brother, the prices of major foundry factories such as TSMC and Hua Hong are tending to stabilize, and the capacity utilization rates of major foundry factories such as TSMC, Samsung, SMIC, and Hua Hong are all above 80%.
From a global perspective, the semiconductor industry is experiencing a strong recovery. John Neuffer, President and CEO of the Semiconductor Industry Association (SIA), estimated in a data report that total sales in 2024 will achieve double-digit growth compared to 2023.
The World Semiconductor Trade Statistics (WSTS) predicts that the global semiconductor market will grow by 13.1% YoY in 2024.
Nomura believes that if the cyclical technology recovery expands to other electronic terminal markets, it will support the semiconductor industry in entering the next rising cycle, which will last from the second half of this year to 2025.
Editor/Lambor