Taiwan-based IC design houses are negotiating with their clients about further price hikes for their chip products to reflect rising manufacturing costs, but have found them particularly notebook and FPD customers become reluctant to accept higher prices, according to industry sources.
TSMC's planned price increases of as much as 20% for mature as well as advanced process technologies are encouraging the fabless chipmakers to negotiate higher prices with customers, the sources said.
With TSMC starting to initiate its price hikes starting as early as the fourth quarter, fabless chipmakers intend to pass the rising costs onto device vendors and assemblers but have found it increasingly difficult to negotiate higher quotes with those engaged in the notebook, TV and FPD sectors, the sources indicated.
In the notebook sector, for example, sales have started slowing down in the second half of 2021 following a strong first half of the year. Speculation has already been circulating about device assemblers and vendors decelerating their chip purchases.
Many Taiwan-based IC design houses are actually aware of limited room for further growth in their gross margins for the rest of this year, judging from more of their customers particularly those targeting mass-market applications expressing reluctance to accept higher prices, the sources said.
TV sales have also started slowing down recently, discouraging related assemblers and brand vendors from stockpiling chips at higher prices, according to sources at Taiwan-based analog IC specialists.
Rising manufacturing costs, coupled with recent demand-side setbacks, will be challenging Taiwan-based IC design houses who are looking to maintain their profitability, according to industry sources.
Article translated by Jessie Shen
