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Semiconductor manufacturers are not optimistic: chips are expected to continue to rise in price this year

TSMC, the world’s largest chip maker. Photo by Ann Wang (Reuters / Scanpix)

Chips, components used in almost all modern electronic devices, are set to rise in price this year, analysts say. There have already been reports in the media that major semiconductor manufacturers are preparing to raise prices.

“Factories have already increased prices by 10-20% in recent years,” said Peter Hanbury, a semiconductor analyst at Bain, a consulting firm. “We expect prices to continue to rise this year, only slightly less, by about 5-7%.”

According to him, producers are raising prices partly because they can afford it, but rising costs are also contributing to rising prices.

“Chemicals used in the production of chips have risen in price by 10-20%. There is also a shortage of workers to build new semiconductor factories, and their salaries are rising, ”says Hanbury.

Glenn O’Donnell, an analyst at market research firm Forrester, notes that rising chip prices are far from a surprise in the current economic climate. According to him, chip prices are expected to increase by about 10-15% this year, about the same as inflation.

“Chip manufacturers are facing supply problems, exacerbated by the war in Ukraine. Demand remains high, but supply constraints remain. In addition, the price of energy resources, including electricity, remains high, ”says O’Donnell.

According to him, rising chip prices for device manufacturers could be passed on to consumers.

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The ongoing chip crisis was triggered by increased demand for electronics during the pandemic. In order to balance supply and demand, the companies are feverishly seeking to increase capacity – for example, Intel, which is seeking to regain its position in the chip manufacturing market, has embarked on major projects in the United States and Europe.

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Pat Gelsinger, head of Intel, made a rather pessimistic prediction in an interview with CNN TV in Davos on Monday that the world is still in the middle of a chip crisis and that it should last until 2024.

Bloomberg announced this month that South Korean company Samsung could increase chip prices by 15-20%, depending on their complexity. Taiwan’s TSMC, the world’s largest chip maker, is also preparing to raise prices again, according to Nikkei Asia Review.

According to the agency, TSMC customers have been warned that prices from 2023 onwards. shock 5-9%.

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