Following Samsung's lead, will TSMC raise prices by 10-15% across all its manufacturing processes?

Strong demand for AI chips is reshaping the pricing landscape of the global semiconductor foundry market. Following Samsung Electronics' lead in raising its foundry service prices, the market expects industry leader TSMC to follow suit, planning to increase prices by 10% to 15% across all its process nodes . This signifies that leading chip manufacturers are entering a new cycle of sustained profit margin expansion.

Production capacity shortages are the direct catalyst for this round of price increases. According to reports from TrendForce and Nomura Securities, TSMC completed a new round of price negotiations with its customers in the middle of this year, implementing price increases of up to 15% for certain 3nm (N3) processes that are in short supply in the second half of the year . TSMC plans to further increase prices by 5% to 10% for advanced processes such as N2, N3, and N5 by early 2027 at the latest.

The expectation of price increases quickly transmitted to the capital markets, prompting Wall Street institutions to significantly raise their valuations of TSMC. Citigroup, Bank of America, and Macquarie, among others, raised their target prices for TSMC, with the highest reaching NT$4,200. Institutions generally believe that the inelastic demand for AI and the increased pricing power will directly boost the long-term profitability of TSMC and its related supply chain.

This return of pricing power began with Samsung. As previously reported by Wall Street Insights , citing Reuters, Samsung raised its 4nm and 5nm foundry prices by 10% to 15% in July, while prices for its mature 8nm process also increased by nearly 10%. Affected by TSMC's capacity overflow, Samsung's long-term loss-making foundry business has ushered in a significant turning point.

TSMC Raises Foundry Prices Across the Board Due to Capacity Shortage

TSMC's advanced process capacity is currently operating at full capacity. Market data shows that its N2 and N3 process chips have been almost entirely pre-ordered by Apple and Nvidia. To meet the demand for the next-generation Nova Lake desktop processors launching in early 2027, competitor Intel will not only use its own 18A process but also increase its purchases of N2X process chips from TSMC, further exacerbating the tight capacity situation.

Amidst a supply shortage of advanced manufacturing capacity, TSMC's price increase strategy is spreading across its entire product line. According to market research reports, in addition to the significant price increase for the N3 process, mature process chips such as N12, N16, and N28, which have not seen price adjustments for three consecutive years, will also see price hikes, with the highest increase reaching 10%. This means that starting in the second half of this year, TSMC will gradually and comprehensively raise the prices of all its foundry chips.

A Citigroup report suggests that TSMC's advanced process capacity utilization will remain high, benefiting from strong demand for AI chips from global tech giants. In particular, the inelastic demand for N2 and N3 chips will support a steady rise in foundry prices until 2027. It is understood that the starting price per N2 wafer at TSMC has reached US$30,000, representing a 10% to 20% premium over N3.

Capital expenditures hit a record high, and Wall Street significantly raised its earnings forecasts.

To widen the technological and scale gap with Samsung and Intel, TSMC is accelerating its capacity expansion.

A report by CLSA indicates that TSMC's capital expenditure is projected to reach US$80 billion in 2027 and expand to US$90 billion in 2028. This year, TSMC's capital expenditure has already been revised upwards to a record high of US$52 billion to US$56 billion, and in July it announced an increase in its US investment to US$265 billion, with plans to build multiple wafer fabs and advanced packaging plants in Arizona.

Strong pricing power and capacity expansion have led major foreign banks to unanimously express optimism about TSMC's profit prospects. Bank of America, Goldman Sachs, and Citigroup have reached a general consensus on TSMC's earnings per share (EPS) for 2026 to 2028, predicting it will break the NT$100 mark in 2026 and challenge NT$170 to NT$200 in 2028. All institutions have given it a "buy" or "outperform" rating, with target prices ranging from NT$3,700 to NT$3,800.

The optimism in the capital market has also extended to the supply chain. Although TSMC's stock price recently fell to NT$2,375 due to the pullback in the Philadelphia Semiconductor Index, institutions believe that with record-high revenue and expectations of a 10% to 15% price adjustment across the board, now is a good opportunity to buy on dips.

Meanwhile, TSMC's expansion plans have driven double-digit revenue growth for semiconductor equipment, materials and cleanroom supply chain companies in the first seven months of this year, and the overall industry visibility has extended beyond 2027.

Samsung fires the first shot in price increases, raising prices simultaneously for both advanced and mature manufacturing processes.

According to a Reuters report, Samsung Electronics raised prices in July for some new orders for advanced process manufacturing services, with increases reaching as high as 15%.

Specifically, the price of 4-nanometer (SF4) chips for customers in mainland China and the United States increased by 10% to 15%, the price of 5-nanometer SF5 wafers also increased by 10% to 15%, and the price of 8-nanometer chips also increased by nearly 10%.

From a market perspective, Samsung's price increase carries significant implications. According to data from research firm Counterpoint, in the first quarter of 2026, TSMC held approximately 73% of the global foundry revenue market share, Samsung approximately 7%, and SMIC approximately 5%. Samsung's foundry division has been consistently losing money since 2022 and has long been unable to effectively close the gap with TSMC.

An article on Wall Street Insights states that Samsung's client base for its foundry business is rapidly expanding, further solidifying its confidence to raise prices. Tesla and Apple both signed chip manufacturing agreements with Samsung last year; in July of this year, Samsung announced a partnership with Broadcom for AI chip production; and Nvidia CEO Jensen Huang stated in March that Samsung would provide foundry services for its new AI inference processor. Furthermore, Google is currently in talks with Samsung to use its SF4 process for chip manufacturing.

Samsung expects advanced process technologies to account for more than half of its foundry revenue this year, with AI and high-performance computing applications accounting for more than 30%, up from 15% to 20% by the end of 2025. Samsung’s SF4 production line at its Pyeongtaek plant in South Korea has been operating at full capacity since the end of last year, producing logic chips for customers such as Qualcomm, as well as base chips for Samsung’s own multi-layer high-bandwidth memory (HBM) chips.

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