TSMC's customers have reportedly agreed to a raise in 3nm chip supply pricing in exchange for the condition that the Taiwan giant keeps up with the semiconductor supply.
TSMC's 3nm Process Is In High Demand, Big Tech Firms Agree To a Price Increase For Steady Supply Chain
With the AI frenzy in play, the companies within the supply chain are the ones to benefit massively from it, especially the semiconductor industry, since the demand has skyrocketed. With the confined supply, firms like TSMC find it challenging to keep up with the order flow. We recently reported on how the Taiwan giant was raising prices of its 3nm node, and it looks like the businesses have now agreed, according to a report by Morgan Stanley. This will likely affect tech behemoths like Apple, NVIDIA, and Qualcomm and would potentially reflect increased consumer product costs.
According to Morgan Stanley, TSMC has reached an agreement with its customers, who have agreed to comply with higher semiconductor prices, given that the firm keeps up with the supply chain and fulfills orders on time. While we haven't received exact estimates of the price increase, Morgan Stanley says that TSMC is all set to see a rise in gross margins, expected to be at 55.1% in 2025 and 60% in 2026. This year, gross margins have already risen by 52.3% due to TSMC's efforts to expand its production facilities to cater to the huge demand.
With the rise in gross margins, the Taiwan semiconductor giant plans to spend big on expenditures, and given that the company has already started the development of the next-gen 2nm process, TSMC will need to ramp up its investments, which is why the firm is estimated to spend around $35 billion and $37 billion respectively within the upcoming two years. TSMC is set to initiate production of a small batch of 2nm wafers by this year, and large-scale production will take effect by 2027.
The 3nm process is expected to receive massive adoption from the markets, whether from Apple with its upcoming A18 Pro SoC or even NVIDIA with its next-gen "Rubin" architecture. Given the demand anticipated in the markets, the node might be TSMC's most popular product. Intel is also expected to leverage the 3nm process technology for its upcoming Lunar Lake and Arrow Lake CPUs.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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