Samsung Electronics (Samsung) is raising the prices the manufacturing of new chips by up to 15% for new orders, according to sources close to Reuters. The move comes as the demand for AI chips continues to chip away at the already constricted supply of the component.
Demand from Chinese customers, in particular, are reportedly the strongest for Samsung, although the Korean electronics giant has also reportedly been unable to meet all orders, as it services those from its US Customers. For that matter, it’s also reserving a portion of its own chip capacity for its own production line.
Unlike the US side, however, Chinese customers are the one who have been more willing to accept Samsung’s latest and, in retrospect, its steepest price increase. Moreover, the company is hoping that the price hikes will help its foundry business turn a profit, as well as narrow the gap between it and its Taiwan-based rival, TSMC.
This isn’t the first time Samsung has raised the prices for its chip manufacturing. Back in July, the company raised it one for its 4nm process, known internally as SF4. The price was raised from 10% to 15%, while its rival TSMC did the same, more or less in the same 5% vein too.
The manufacturing gap between Samsung and TSMC, at this point, can best be described as a massive chasm or a deep ocean; the chip production for the Korean conglomerate stands at 7% of the global foundry revenue. For the Taiwanese foundry, it accounts for more than 70% of the world’s chip demand. Little wonder and no prizes given for guessing who one of their major customers is.
It also doesn’t help that the AI boom and demand of AI chips isn’t going to let up anytime soon. On a sidebar, it has been forecasted that the memory chip shortage — also an unfortunate byproduct of the ongoing chip shortage — is expected to last well beyond 2030.
On another sidebar, one consumer brand that may likely be affected by Samsung’s price hike is Nintendo. The gaming company uses the Korean company’s chips in the manufacturing of the Switch 2‘s chip, so don’t be surprised if the handheld console suddenly receives a price hike in the near and immediate future.
(Source: Reuters)
