Taiwanese foundry TSMC may not be familiar to you at all. This company is responsible for the production of a large part of the chips that give life to our devices. Apple and NVIDIA are just some of the companies that buy processors from them, also counting Intel, Qualcomm and AMD, among others, as clients.
Increases tension in the hardware segment
We must bear in mind that TSMC is the largest foundry in the industry currently manufacturing for many other companies. Its strength lies in a great market position due to its commitment to developing new manufacturing processes. But, his clients begin to reveal themselves before the incessant rise in prices.
It seems that TSMC wanted raise wafer prices in 2023 (which are processed and made into chips). As initially indicated, a price increase of between 6-9% was expected. Although the company subsequently adjusted the price increase between 3-6%.
This plan did not please Manzana, who represents approximately 25% of TSMC revenue, being the main client. From Apple they have already said that they will not pay more for their processors. Currently it seems that the foundry and the apple company would be negotiating prices.
Add to this negative NVIDIAanother of the customers important and TSMC priority. Apparently Jensen Huang’s company would be against this new price increase, which could generate a cut in profits. Also, this refusal is given by the great criticism received by the company for the price of its products.
And in one more twist of the plot, MediaTekwhich is the TSMC’s third customer, is thinking about planting. If the three main customers stand down, the Taiwanese foundry faces serious problems. It remains to be seen what AMC, Qualcomm, Broadcom and Sony, who are also prominent clients, will do.
TSMC Power Position
That Apple and NVIDIA stand up is good news, up to a point. The problem is not that they can be planted, the problem is in the position of power that TSMC has. We must bear in mind that there is currently no foundry that can produce chips at this level. They have the best manufacturing processes and are the ones that work best in the development of new manufacturing processes.
A movement that would be given by the incessant criticism of the prices of its new products. The iPhone 14 is more expensive than the previous model with no improvements, which has generated a lot of criticism. Something similar happens in NVIDIA, which despite the jump in power of the RTX 40 Series, its high price has not liked anything at all.
We will have to wait for an event, but everything indicates that in the end, the parties will have to reach an agreement. There will be an increase in the price of the chips, but it will possibly be lower than what was requested by TSMC, due to the strong position of both companies.