TSMC to Raise Wafer Foundry Prices Starting Next Year, Up to 10% Increase

According to the Nikkei, citing sources, Taiwan Semiconductor Manufacturing Company (TSMC) (2330-TW) (TSM-US) has begun discussions with customers regarding a potential price increase of up to 10% for its wafer foundry services in 2027, in response to escalating manufacturing and production costs.

The report states that TSMC, the primary chip manufacturer for Nvidia and Apple, initiated negotiations in June and finalized a base price increase ranging from 5% to 10% this month. The adjustment will take effect starting next year and will apply to both advanced and mature semiconductor manufacturing processes.

TSMC and other chipmakers are struggling to manage soaring costs across various production inputs, including raw materials, equipment, and electricity. Earlier this month, TSMC raised its capital expenditure forecast for 2026 to accommodate strong AI demand and rising expansion costs, particularly as it advances its massive $265 billion factory expansion project in Arizona.

As a long-term manufacturing partner for global tech giants such as Alphabet and Amazon, TSMC has historically resisted the volatile pricing cycles seen in the memory industry, maintaining a stable, collaborative relationship with customers through industry ups and downs.

However, global supply chain disruptions caused by Middle East conflicts, coupled with surging demand from the AI sector, are driving up costs and pressuring TSMC to accelerate its global capacity expansion.

Nikkei reports that TSMC delayed the price adjustment until 2027 to give customers sufficient time to adapt.

TSMC President C.C. Wei, after reporting better-than-expected earnings in July, told analysts: "We don't do surprise price hikes. We earn our profits by creating value, and we ensure our profitability and gross margins are sufficient to support long-term sustainable expansion — which benefits both our customers and TSMC. That is our business philosophy."

Customers including Nvidia have urged TSMC to accelerate capacity expansion due to concerns over supply bottlenecks for AI accelerators and other data center components. In response, TSMC has pushed forward large-scale investment plans, including its Arizona facility, which is considered the largest foreign direct investment in U.S. history.

TSMC recently reported second-quarter revenue and profits exceeding market expectations and raised its growth outlook. However, the company still acknowledges challenges in meeting all customer order demands. The wave of what TSMC calls the "AI megatrend" is expected to continue driving the company's growth for the next several years.

In a statement on Tuesday (21st), TSMC said: "Our pricing strategy is based on strategic considerations, not opportunism. We will continue to work closely with our customers and demonstrate the value we create."