Due to an increased cost of raw material procurement and inflation rates worldwide, Samsung could soon hike the prices of chip-making at its facilities.
The company has already negotiated these prices with some clients and is in talks with the rest. The changed prices could be seen from the second half of this year, just like the rivals TSMC are doing. This is an industry-wide push of prices, triggered due to chip shortage.
Samsung to Increase Chip-Making Prices
Though TSMC is the world leader in producing sophisticated chips, Samsung too is catching up lately with its advanced technology set up exclusively for this. The company has invested heavily in this segment and even grabbed orders from several big companies worldwide until the next five years.
But now, it’s forced to hike the agreed prices of chip-making due to various reasons. People familiar with the matter said the reasons are plenty, citing inflation, Russia’s war in Ukraine, lockdown measures in China, and rising interest rates as some.
It’s expected that Samsung may hike these prices by 20% at least to cover up all the necessary costs. This is inevitable, as the rivals have already pushed their prices up citing the same reasons.
These include TSMC increasing anywhere between 5% to 8% from 2023, following a 20% price hike last year and the Microelectronics Corp hiking around 4% in the second quarter. Experts said chips produced on legacy nodes may face even bigger price hikes, as they are less efficient.
Samsung has repeatedly shared these hiking plans with some of its clients, with still in talks with rest. This is an industry-wide push, as the costs for chemicals, gas, wafers, equipment and construction materials have all risen.
Also, the huge demand for smartphones, cars, and game console makers is pressuring chip makers to produce at whatever cost.