Samsung will increase the cost of its chip manufacturing services during the second half 2022. Between 15 and 20%. The production of products that are based upon mature technical processes will be more costly. Bloomberg reports that the company has reached an agreement with some clients while negotiations continue with others, citing sources close. Samsung declined to comment.
The last year was relatively quiet for the South Korean giant. Despite competitors raising prices for semiconductors in the face of their scarcity, Samsung prices remained stable. She decided to hedge against increasing risks in light of current realities. A volatile geopolitical environment, new China lockdowns, and rising inflation on the international market are all factors that can hinder a business’ success. There is also an increase in the prices of materials. Bloomberg reports that the prices of chemicals, gas, and silicon wafers as well as equipment for making microcircuits have increased by 20-30%.
The price rise at Samsung’s semiconductor production plants will have an impact on smartphone manufacturers, automotive manufacturers, and game console manufacturers. The final consumer of these products will ultimately have to pay. The world’s 2/3rds of chip production comes from Taiwan Semiconductor Manufacturing Co. (TSMC).
TSMC also warned customers in the past that it would increase its prices for its services by 5-8% in 2023. In 2021, the chipmaker already increased prices by 20%. UMC, another Taiwanese chipmaker, plans to raise its prices by 4%. However, this is already happening in the second quarter 2022. ASML, the world’s biggest manufacturer of chip making equipment supplied by Samsung, TSMC, and UMC, reported last month rising labor costs, shortages in materials and components, and rising logistic costs. The company is having difficulty coping with equipment orders and will only be able close 60% of them before the end of this year.
Bloomberg reports that Samsung spent more than $36 billion last year to upgrade and expand its chip production capacity. This is more than any of its competitors. In terms of revenue, Samsung surpassed Intel to become the largest semiconductor producer. The company also announced its intention to surpass TSMC and be the largest global chipmaker in terms of production.