Samsung in talks to raise chipmaking prices by 20%

SAMSUNG’S DECISION IS A SHIFT FROM ITS RELATIVELY STABLE PRICING POLICY LAST YEAR

SEOUL: Samsung Electronics Co. is talking with foundry clients about charging as much as 20% more for making semiconductors this year, joining an industry-wide push to hike prices to cover rising costs of materials and logistics.

Contract-based chip prices are likely to rise 15% to 20%, depending upon the level of sophistication, according to people familiar with the matter, who asked not to be identified because of the sensitivity of the issue. Chips produced on legacy nodes would face bigger price hikes, they said. The new pricing would be applied from the second half of this year and Samsung has finished negotiating with some clients, while it is still in discussions with others, the people said.

Samsung’s decision is a shift from its relatively stable pricing policy last year, when the industry rushed to raise prices in the wake of a global chip shortage. The company is facing multiple macro risks such as the war in Ukraine, lockdown measures in China, rising interest rates, and inflation. That is throwing a wrench into business plans that are typically made a few years in advance.

A Samsung spokesman declined to comment.

The move translates into additional pressure on makers of smartphones, cars, and game consoles to lift the prices consumers pay. Samsung and Taiwan Semiconductor Manufacturing Co. (TSMC) account for more than two-thirds of global capacity for outsourced chips.

Manufacturing costs for chipmakers are now rising at 20% to 30% on average on all fronts, from chemicals, gas and wafers to equipment and construction materials.

Contract chip manufacturers including TSMC and United Microelectronics Corp. (UMC) are warning clients that they plan to raise prices by a mid-tohigh single digit per cent on the heels of a price hike several months ago.

Industry leader TSMC has told clients that it plans to raise prices by 5% to 8% from 2023, following a 20% price hike last year. UMC is also planning another round of 4% price hikes in the second quarter. ASML Holding NV, a key supplier to Samsung and TSMC, warned last month of rising pressure on labour costs, in addition to higher material costs and transportation costs.