Report: TSMC will raise wafer foundry prices by 3% to 6% starting in January next year, extending order visibility to 2030.
TSMC's new round of price increases has arrived, covering the entire semiconductor supply chain from advanced processes.
On Wednesday, Digitimes, citing supply chain sources, reported that TSMC has decided to adjust wafer out prices based on process technology starting in January 2027, with increases ranging from approximately 3% to 6%, and the most significant increases expected for advanced processes.
Currently, TSMC's 8-inch fab has a capacity utilization rate of over 100%, and its processes below 45 nanometers are fully loaded, with order visibility extending to 2030.
This price increase will directly raise the cost of wafer fabrication for customers and will be passed on step by step along the supply chain. Wafer foundries such as Samsung Electronics, Intel, UMC, and VIS, as well as packaging and testing companies and IC design customers, are all facing pressure to follow suit with price increases.
Supply chain sources point out that TSMC's 2nm and 3nm capacity is in short supply, and bottlenecks in advanced packaging such as CoWoS remain unresolved, making it difficult for customers to quickly switch suppliers even when faced with price increases.
TSMC's US-listed ADRs fell 1.2% on Wednesday.
AI demand spillover, supply and demand reversal in mature manufacturing processes
Behind this round of price increases is the comprehensive expansion of chip demand driven by the expansion of AI data centers.
The demand driven by AI is no longer limited to GPUs, ASICs, and high-bandwidth memory (HBM). The construction of data centers is simultaneously driving orders for mature process products such as PMICs, MCUs, MOSFETs, driver ICs, analog ICs, MEMS, mixed-signal chips, and sensors.
High-speed optical communication components, silicon interposers, and various packaging materials are also driven by the increase in AI server shipments.
The number and types of chips required for each AI server have increased significantly compared to previous years, with demands ranging from computing, power supply, network communication to optical communication. The scope of coverage for wafer foundries is far greater than before.
VIS has directly benefited from this spillover effect – its 8-inch wafer foundry market will be in short supply in 2026, with order visibility of 3 to 5 months, capacity utilization is currently over 90%, and demand will remain strong in the second half of the year.
Advanced manufacturing processes saw the largest price increase, with the follow-up effect spreading throughout the entire supply chain.
TSMC did not uniformly raise prices across all processes this time, but rather tiered pricing based on process and product category. High-priced advanced processes such as 2nm and 3nm saw significant price increases, with customers still queuing up for capacity; mature and specialty processes were priced individually based on product, capacity utilization, and customer situation.
Other wafer foundries have followed suit. UMC, Powerchip Semiconductor, and VIS have all announced price increase strategies, and the price increase effect is expected to continue until 2027.
In the past, mature process manufacturers were hampered by weak consumer demand and low capacity utilization. However, with the recovery of AI chip orders, their capacity scheduling has improved significantly, and their bargaining power has increased accordingly.
Cost reassessment in the IC design industry; the ability to pass on costs varies by product.
Following TSMC's price adjustment, IC design companies are facing pressure to reassess product costs.
Supply chain sources point out that high-end GPUs and ASICs have higher unit prices and relatively ample room for price pass-through; however, mature process MCUs, PMICs and consumer ICs are constrained by market competition, and whether the costs can be fully reflected in the final price remains uncertain.
IC design companies also pointed out that the cost pressures they will face in 2027 will not only be due to rising wafer foundry prices, but also because the prices of packaging and testing, substrates, materials and memory will continue to rise and will be fully factored into product costs.
High costs of building factories overseas are providing structural support for price increases.
This round of price increases is also driven by cost factors.
It is estimated that TSMC's cost of building a factory in the United States is about 4 to 5 times that of Taiwan. TSMC has previously stated that the initial mass production of 2nm will dilute gross margin by about 3 to 4 percentage points, and overseas wafer fabs may also bring about 2 to 3 percentage points of gross margin pressure in the next few years. Against this backdrop, raising wafer out prices is in line with market expectations.
TSMC Chairman C.C. Wei once said that when customers choose a wafer foundry partner, "it's not like buying milk at 7-Eleven, where you can switch to another company if you're not satisfied today."
Supply chain sources indicate that the order shifts by major clients such as Google, Apple, and Nvidia are mostly for non-core chips or limited-scale orders, and the wafer starts from TSMC's main high-end process customers have not shown significant changes. TSMC remains highly confident in demand for 2026, continuing to increase capital expenditures and revising its full-year USD revenue growth forecast upward.
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