Samsung may hike prices for chip contract manufacturing

Samsung Electronics is in talks with clients about hiking prices for chip contract manufacturing by up to 20 percent this year, Bloomberg news report said.
Samsung Galaxy A8+ in India
The move, expected to be applied from the second half of this year, is part of an industry-wide push to raise prices to cover rising materials and logistics costs.

Contract-based chip prices are likely to rise around 15 percent to 20 percent, depending upon the level of sophistication, with chips produced on legacy nodes likely to face bigger hikes.

Samsung is the world’s second-largest chip contract manufacturer, after Taiwan Semiconductor Manufacturing (TSMC).

TSMC has forecast an up to 37 percent jump in current-quarter sales, saying it expects chip capacity to remain very tight this year amid a global chip crunch that has kept order books full and allowed chipmakers to charge premium prices.

Samsung said in an earnings call in late April that major customers’ demand for its chip contract manufacturing was greater than its available capacity.

Research firm TrendForce earlier said TSMC’s 4Q21 revenue reached $15.75 billion, a QoQ increase of 5.8 percent. Though 5nm revenue spiked thanks to the new iPhone, 7/6nm revenue dropped due to a weak Chinese smartphone market. TSMC accounts for more than 50 percent of global market share.

Samsung strengthened 4Q21 revenue to $5.54 billion, a quarterly increase of 15.3 percent owing to the completion of new advanced 5/4nm process capacity and the mass production of new flagship products from major client Qualcomm.

Though Samsung’s foundry business posted record revenue in Q4 2021, the slower ramp-up of advanced process capacity eroded profitability. TrendForce said that improving advanced process capacity and yield in 1Q22 is one of Samsung’s top priorities.