According to Taiwan media reports on May 16, IC design customers are faced with a dilemma due to the 6% price increase of TSMC's entire process in 2023. Especially at this stage, some applications have begun to loosen, and they need to reduce the amount of film input. However, in the face of important partners requesting price increases , and difficult to refuse.

Industry insiders pointed out that the previous sharp rise in wafer foundry quotations was mainly concentrated in second- and third-tier factories. Even due to the shortage of supply, some wafer foundries adopted a "quarterly increase" strategy, resulting in prices that were much higher than first-tier factories. In view of this, many IC design houses prefer to switch to a single-line factory for film production.

However, just as IC design manufacturers are considering reducing production costs, there is a supply chain news that TSMC will increase the price of the whole process in 2023, and the advanced process and mature process will increase by 6%. This news makes IC design customers face a dilemma, especially at this stage, some applications have begun to loosen, especially the demand for some IC applications in the market, including the consumption of mobile phone consumer ICs, PCs, and MCUs for small home appliances has dropped sharply, and the amount of film input has been reduced. , but had to consider the price increase proposed by the big OEMs at this time.

The report quoted the analysis of the industry that under the poor market conditions in related fields, some of the previous long-term contracts may also have short-term variables, and individual manufacturers have different ways to deal with it. The main key is when the market demand in mainland China will recover. In the second half of the year, there will be more adjustments in consumer IC applications.

IP/ASIC vendors may benefit from it

Industry insiders believe that TSMC's cooperation (IP) factories and some special application IC (ASIC) manufacturers will benefit from the effect of TSMC's 6% price increase in the whole process in 2023, because IP factories can benefit from rising wafers. The price pushes up the premium income.

According to Taiwanese media, the proportion of Taiwanese IP manufacturers and ASIC-related industry revenue from the US market has increased, which also reflects the growing demand in the US high-speed computing market, and related US customers are also mostly in TSMC due to their high demand for advanced manufacturing processes. TSMC's price increase, if the relevant manufacturers have a high penetration rate in the client, it is also expected to take advantage of the trend and reflect the demand from customers to "package" and pass on the higher cost.

The ASIC industry said that the company produces wafers for customers. When the foundry increases its quotation, it will also negotiate prices with customers in the ASIC design service section. However, given that ASIC is not a standard product in the market, and it is not easy to switch to other places to obtain production capacity, usually clients will accept some reasonable price increases.

For IP companies, the price of single wafer production for foundry customers has risen, and for the IPs that have been adopted, the mass production royalties that can be brought in can be higher. Among Taiwanese companies, TSMC is an important customer of Liwang, M31 and other companies. Liwang's royalties account for more than 70% of its performance, and nearly half of its royalty income comes from TSMC.