Foundry industry price hikes to hurt smartphone prices, potentially PCs
Wafer prices are on the rise, which means the cost of electronics is likely on the way up for consumers.
What you need to know
- TSMC's recently announced price increases for wafers will probably affect the cost of many electronic devices.
- It's predicted that smartphone prices will increase to maintain profit margins.
- Smartphones will be most affected by the wafer price increases, but PCs and other electronics could also see price increases.
Chipmaker TSMC recently shared changes to its wafer prices with customers, making it likely that price hikes for certain devices will continue into 2022. A report by Counterpoint digs into the effect of wafer price increases in the smartphone industry and the global chip industry. Since 2022 and the current quarter, wafer prices of matured nodes have gone up 25-40% and are expected to increase another 20% by 2022.
Smartphones will likely be the devices most affected by these price increases, particularly low-end devices. Though, it's safe to assume that PC parts and prices for the best Windows laptops and other computers will be affected as well. Logic integrated circuits make up a large portion of the cost of making smartphones. When integrated circuit prices go up, smartphone manufacturers have to adjust to maintain profit margins.
Counterpoint predicts a 5-12% cost increase in 2022 for logic integrated circuits for premium smartphones. A 6-14% increase is expected for mid-range smartphones. Low-end smartphones are expected to see the highest increase, ranging from 8-16%. Counterpoint notes that it doesn't expect cost increases for non-memory and non-RFFE logic integrated circuits. Note that these predictions are for the cost of logic integrated circuits in smartphones, not the prices of smartphones.
The rise in wafer prices is due to the current global chip shortage. TSMC has let its customers know that it will increase wafer prices mainly from the start of 2022. It's important to note that TSMC isn't alone in raising wafer prices. In fact, the chipmaker has largely held its wafer price stable for a long time, especially when compared to smaller manufacturers.
Counterpoint does not expect 10nm and below chips to be as affected by the increased prices of wafer prices at matured nodes. This is because TSMC and Samsung focus heavily on maintaining profit margins in devices that use these types of chips.
A full report from Counterpoint breaks down the global integrated circuit shortage and how it affects the prices of matured nodes.
Last month, we covered how price increases from TSMC may affect the best CPUs and best GPUs.
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