In recent years, hardware has kept getting more expensive—first during the chip shortage and the pandemic, then as wafer suppliers raised prices and the cost of the newest silicon processes continued to rise. Now another markup may be coming: TSMC plans to raise prices for its advanced nodes (5nm and newer), the ones used to make today’s most in-demand hardware. That could push up prices for processors, GPUs, and even whole PCs.
According to information reported by the Taiwanese website DigiTimes, TSMC now plans to raise manufacturing prices for its advanced processes, which include technologies at the 5nm node and newer—4nm, 3nm, and the upcoming 2nm process. This means the production costs for most PC and mobile processors, as well as GPUs, will increase across the board, affecting not only incoming new generations but also the vast majority of products currently on the market. This includes all Ryzen processors (except older AM4 socket models) and Radeon RX 7000 and 9000 graphics cards, or Nvidia’s GeForce RTX 4000 and 5000 series. The price hike would also impact Intel Core Ultra processors for desktops and laptops, as TSMC manufactures their most important chiplets.
The company reportedly wants to increase prices for these technologies by 5–10% starting next year. This price increase has already been announced to the firm’s clients, which is likely how the information became public. This is an additional price hike. New manufacturing technologies (e.g., the 2nm process) are already significantly more expensive than previous ones by default, but now an extra surcharge will be added.
The reasons include various factors driving up the company’s own production costs—cited are currency exchange rate fluctuations and other elements, but a key component is the U.S. tariffs implemented by the Trump administration. Although these tariffs apply to goods imported into the U.S., TSMC is directly affected because it must purchase foreign materials and equipment for its U.S. factories, which the tariffs make more expensive. Additionally, tariffs make it more expensive to buy U.S.-made equipment even for factories in other regions, becomes U.S manufacturing costs themselves rise due to the tariffs.
TSMC is also now facing challenges such as the U.S. administration revoking measures that allowed companies like TSMC (and also SK Hynix, for example) to purchase American equipment and services for use in their factories built on Chinese territory. Now, companies must apply for licenses for any such equipment without certainty of approval.
Since TSMC is the undisputed leader in advanced processes, it can afford to raise prices because clients need its technology for their flagship products—the company is not forced to cut into its margins. However, TSMC’s price increase could slightly improve the position of competitors like Samsung and Intel and enhance their chances of securing some vital orders. Still, TSMC likely isn’t threatened by a major client exodus.
Price reduction for older technologies due to Chinese competition?
However, TSMC could reportedly slightly reduce prices for its older processes. There is competition on these nodes that keeps pricing in check, and Chinese firms are increasingly gaining ground int his area. The Taiwanese leader likely doesn’t want to leave them too much room to use as a springboard to more modern technologies and is therefore willing to sacrifice some margins in this case.
Unfortunately, even if the older processes do get cheaper, it may not have significant benefits for us, as they are generally used for less critical chips that don’t constitute as large a portion of the bill of materials in, say, a laptop or motherboard. Thus, the overall savings seen may not be substantial.
In contrast, the most advanced chips in CPUs or GPUs are relatively expensive to manufacture per unit, so a 10% price increase could be quite noticeable sum impacting the price we pay for computers and hardware. Unfortunately, this means we may be in for processor and graphics card prices rising, or manufacturers may try to use less advanced silicon in them. For AMD or Intel, this could result in these companies being less willing to launch processors with two CPU chiplets (and thus more cores) in lower price brackets, than they would have before the manufacturing price hike. Or, cheaper models in their lineup may continue to use older processes like 7nm and 6nm technology for longer time, instead of being replaced by products manufactured on 4nm or 3nm technology.
English translation and edit by Jozef Dudáš
Sources: DigiTimes, Dan Nystedt (1, 2, 3)
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