In brief: The semiconductor industry can't keep up with demand for advanced chips even as foundries have connected to optimize their output. Now even that's off the table, and so companies like TSMC are simply raising prices to make the most out of the current situation.

On Tuesday, Taiwan Economy Government minister Wang Mei-Hua sought to reassure the The states that chip shortages would ameliorate towards the terminate of the year equally the Taiwanese authorities has been taking steps to increase the country's output. For a brief moment, industry watchers were really optimistic well-nigh the possibility that supply could finally catch upward with demand in the coming months.

However, a new report from Nikkei suggests the industry will take to brace for yet some other blow, equally TSMC has notified its clients that information technology volition increase contract pricing by upwardly to 20 percent, which is college than any previous toll hike. Taiwanese chipmakers collectively increased contract pricing by 10 per centum over the by 12 months.

The skillful news is the toll increases vary from client to client, so non all industries will see the same bear upon. For some of the notified clients, however, the cost hike is immediate and volition no doubtfulness result in higher prices for stop customers. Unfortunately for tech enthusiasts, this ways that processors, GPUs, PC motherboards, phones, and consoles will see little improvement in availability simply perhaps a substantial increase in their retail price.

Annihilation made using TSMC's 7nm and 5nm procedure nodes will toll upwards to 10 percent more than per wafer, while fries fabricated using 16nm and older procedure nodes will meet higher price hikes.

Recently, other foundries have as well increased prices for their clients, and that includes GlobalFoundries, United Microelectronics, Semiconductor Manufacturing International Corp., and Powerchip Semiconductor.

Concluding month, Samsung announced a similar price hike in order to finance new foundries and expansions on current production facilities. Information technology wouldn't be surprising if there's a similar motivation behind TSMC'due south price hike, not to mention that improved margins tin offset the costs and risks of pushing scrap manufacturing equipment to the limit.

Otherwise, TSMC'due south decision to increase prices for its nigh advanced procedure nodes is grounded in more pressing realities, such as unrelenting demand for anything with a chip inside, the higher cost of raw materials, freight shipping costs, and keeping investors happy by making certain the gross margin doesn't fall under the industry standard, which is 50 pct.