The world's largest foundry, TSMC, is set to increase prices for advanced and mature processes by up to 10% starting in 2027, reflecting rising costs of raw materials, manufacturing equipment, and overseas factory construction.
According to Nikkei Asia, multiple sources reported on July 21 that TSMC has recently completed price negotiations with major clients, with new rates expected to take effect in early 2027. The price increase will apply to advanced processes below 7 nanometers (nm), which accounted for approximately 77% of TSMC's total revenue in the second quarter.
The base increase is reported to be between 5% and 10%, depending on the customer and product. If a customer exceeds previous expectations with additional orders for high-performance computing (HPC) semiconductors, a surcharge of 10% to 15% will be added to the base increase. As a result, the final price increase for some advanced semiconductor orders could exceed 10%.
Prices for mature processes, including legacy processes such as 12nm, 16nm, and 28nm, are also expected to rise by up to 10%. However, some products may see lower increases. Mature processes accounted for about 23% of TSMC's revenue in the most recent quarter.
The price negotiations began in June and were reportedly concluded this month. Industry insiders noted that TSMC opted for a cautious approach by delaying the implementation of the price increase until 2027, allowing clients time to adjust.
This price hike is attributed to overall increases in production costs, including labor, raw materials, chemicals, and logistics. The expansion of overseas production facilities and the ramp-up of the cutting-edge 2nm process are also putting pressure on profitability. Additionally, TSMC has warned that geopolitical tensions, particularly following the outbreak of war between the U.S. and Iran earlier this year, could impact the supply and cost of essential gases needed for semiconductor production.
Previously, TSMC Chairman C.C. Wei addressed the company's pricing strategy during a recent earnings call, stating, "We do not suddenly raise prices four or five times. It would be difficult for our customers to endure such price increases and survive."
In the semiconductor industry, there has been a trend of price increases in response to rising costs and expanded investments in artificial intelligence (AI) infrastructure. Companies like Intel and AMD have raised product prices due to supply constraints driven by demand for AI computing, while Taiwanese foundry UMC and TSMC subsidiary Vanguard International Semiconductor have also announced price hikes.
* This article has been translated by AI.
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