Computers & Electronics

Computer Chips Price Going Up to 20% Higher

  • Last Updated:
  • Sep 29th, 2021 11:19 am
[OP]
Member
User avatar
Dec 19, 2019
273 posts
2195 upvotes

Computer Chips Price Going Up to 20% Higher

Since this is the computer forum and you know, computer chips are needed for those things, I thought this news story might be interesting for those involved in tech:

TSMC hikes chip prices up to 20% amid supply shortage

Main idea: "TSMC and other Taiwanese semiconductor companies raised chip prices by more than 10% between last fall and this spring. But with strong demand continuing to outstrip supply, TSMC decided to sharply increase prices again."

AMD among other big name companies use their chips in their products. So, do you think this will cause an increase in computer prices again? Maybe less video game consoles around? Or will AMD and others just absorb the cost (lol)?
Try speaking American, it's the only language I understand.
22 replies
Deal Expert
User avatar
Nov 15, 2004
20474 posts
4233 upvotes
Toronto
My Intel stock is due to moon any day now.
Deal Expert
Feb 24, 2018
24347 posts
31237 upvotes
Biden inflation. Completely normal.

Once oil is stabilized (record high oil), and monetary policy tightens (record monetization of debt), expect things to smooth out in terms of component prices (Crypto Boom, GPU shortages, CPU inflation, Semiconductor Producer inflation, Generalized Consumer Electronics Inflation).

I'm looking forward to great deals this Christmas season (I'm looking forward to 2024).

Slow train wreck (yes).
.
Sr. Member
Dec 6, 2020
937 posts
1041 upvotes
A more accurate headline would be "TSMC moves to enrich its shareholders by 20% due to rising demand."

It's not as if TSMC is paying 20% more for capital, or as if 20% their fabs no longer work, or as if wages have gone up 20%. They're taking 20% more of our money because they believe they are entitled to it.
Deal Expert
Feb 24, 2018
24347 posts
31237 upvotes
middleofnowhere wrote: A more accurate headline would be "TSMC moves to enrich its shareholders by 20% due to rising demand."

It's not as if TSMC is paying 20% more for capital, or as if 20% their fabs no longer work, or as if wages have gone up 20%. They're taking 20% more of our money because they believe they are entitled to it.
If you believe it's all margin, I've got a bridge to sell you in Kabul.

It's a mix of real and expected cost increases and margin expansion.
.
Deal Fanatic
Sep 16, 2013
6929 posts
4660 upvotes
SW ON
Where did increased demand come from?
Deal Addict
Jan 1, 2015
1004 posts
1093 upvotes
Toronto, ON
alpovs wrote: Where did increased demand come from?
Well it comes from everything nowadays requiring chips as we push to make everything smart.

Cars, phones, TVs, smart devices, and even damn Samsung fridges (never get those!) uses chips. There's only a certain amount of production capacity at this point in time.

Adding onto the fact that factories were temporarily shut-down during COVID, the supply of chips have been suppressed while demand is higher than ever. Similar to steel, HRC prices are at near all-time highs because China is cutting supply to reach emissions targets and demand is increasing due to infrastructure stimulus occurring worldwide.
Deal Expert
Jan 27, 2006
20527 posts
13918 upvotes
Vancouver, BC
alpovs wrote: Where did increased demand come from?
The increasing demand has been the story for the past decade. What threw a wrench into things was COVID on three different levels:

1. The product manufacturers cut their chip orders when COVID hit thinking that demand for the products will drop into the toilet as a recession, if not a depression, hit due to the strong possibility of long lockdowns and no known cure/vaccine in sight. Unfortunately, for the manufacturer's their projections didn't happen so they ordered more stock but it was too late as many of the chip plants adjusted their production according to their orders.
2. Many of the chip plants have had shutdowns due to COVID lockdowns cutting into supplies. Malaysia is currently hard hit in terms of their chip packaging plants - taking the wafers, cutting them up into chips, and putting those chips into various packaging for shipment to the product manufacturers.
3. General worldwide logistics problems in the time of just-in-time inventory.
Deal Addict
Jan 19, 2018
1316 posts
841 upvotes
Using iPhone 12 as an example. The A14 is estimated to cost around $40 USD. So a 20% increase would be $8. There's likely to be an impact in the hundreds of millions up to more than a billion dollars to Apple's bottom line since they sell around 200 million iPhones a year. I could see it going either way. A company the size of Apple could absorb it without impacting their profits too much (less than 2%), other companies I'm not so sure.
Last edited by IceCreamPanda on Aug 28th, 2021 12:51 pm, edited 1 time in total.
Deal Addict
Jan 19, 2018
1316 posts
841 upvotes
middleofnowhere wrote: A more accurate headline would be "TSMC moves to enrich its shareholders by 20% due to rising demand."

It's not as if TSMC is paying 20% more for capital, or as if 20% their fabs no longer work, or as if wages have gone up 20%. They're taking 20% more of our money because they believe they are entitled to it.
Wages have in fact gone up 20% since early this year.
Taipei, Nov. 13 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, said it will raise regular salaries for employees in Taiwan by 20 percent, starting Jan. 1, 2021.
https://focustaiwan.tw/business/202011130008

There is also the increased cost of the $12 billion Arizona plant to make up for. Capital spending is also way up. TSMC plans to spend $100 billion over the next 3 years to stay ahead of the competition. Capital spending will be $25 billion to $28 billion in 2021 which is roughly a $10 billion increase over 2020 (over 50% increase).

https://fortune.com/2021/04/01/tsmc-100 ... age-spend/
Deal Expert
Jan 27, 2006
20527 posts
13918 upvotes
Vancouver, BC
bobohobo2kx wrote: Using iPhone 12 as an example. The A14 is estimated to cost around $40 USD. So a 20% increase would be $8. There's likely to be an impact in the hundreds of millions up to more than a billion dollars to Apple's bottom line since they sell around 200 million iPhones a year. I could see it going either way. A company the size of Apple could absorb it without impacting their profits too much (less than 2%), other companies I'm not so sure.
The larger companies may use the headlines as an excuse to increase prices... sure they can absorb such a small price increase but the question is will they?
Deal Expert
Aug 22, 2011
37793 posts
23873 upvotes
Center of Universe
craftsman wrote: The larger companies may use the headlines as an excuse to increase prices... sure they can absorb such a small price increase but the question is will they?
They won't...
I work in Aerospace and Defense and have had to send letters of price increases to our end customers.
Deal Fanatic
User avatar
May 11, 2009
7479 posts
4104 upvotes
Debtario
More doom and gloom. Sure, stuff may go up, but Tech will depreciate unless all innovation comes to a halt and we get stuck with what we've got.

Supply/demand will have much greater impact than production costs, RE: GPU prices.
"I possess a device, in my pocket, capable of accessing the entirety of information known to man. I use it to look at pictures of cats and get in arguments with strangers"
Deal Fanatic
Sep 1, 2004
9196 posts
8442 upvotes
alpovs wrote: Where did increased demand come from?
When we have to send kids to learn online last year.

Then it's the PS5/XBX/GTX30/RX60 GPU.

Not to forget everyone wants an EV and cars that's also short. So if demand is high and supply is the same, price goes up.


Supply is also short, thanks to drought then flood then COVID Delta in Taiwan.

All the time Taiwan has to stop loss on China poaching their key staff.
https://www.scmp.com/tech/tech-war/arti ... r-patriots
Deal Fanatic
Sep 16, 2013
6929 posts
4660 upvotes
SW ON
Xtrema wrote: When we have to send kids to learn online last year.

Then it's the PS5/XBX/GTX30/RX60 GPU.

Not to forget everyone wants an EV and cars that's also short. So if demand is high and supply is the same, price goes up.
We who? People of Ontario? Even if you take whole Canada it's only 36 million people compared to 7 billion in the world. And suddenly Ontario created shortage in the world?

People have always been buying cars. I don't believe they want to buy more now. Maybe fewer cars.

Why do you think demand is high? Supply is low, hence my question. Demand is the same. It's not that people started to want to buy two or three GPUs or cars at once.
Deal Fanatic
Sep 1, 2004
9196 posts
8442 upvotes
alpovs wrote: We who? People of Ontario? Even if you take whole Canada it's only 36 million people compared to 7 billion in the world. And suddenly Ontario created shortage in the world?

People have always been buying cars. I don't believe they want to buy more now. Maybe fewer cars.

Why do you think demand is high? Supply is low, hence my question. Demand is the same. It's not that people started to want to buy two or three GPUs or cars at once.
Why do you think doing stuff online only in 2020/21 is a Canada only phenomenon. The whole world is the same. As a company of 1200, we bought 800 extra laptops last year to accommodate WFH. That's 3-4x the replacement rate of typical year.

My supplier is selling every Chromebook he can get his hands on to school board. That's 100k extra laptops that would have otherwise sitting on shelves of BestBuy collecting dust.

Now that's just cases I knows of in Calgary. Multiply these instances all over the world and you know why we have shortages.

What may have made it worse was crypto and decimate GPUs availability and then you add fuel to the fire by scalpers that people keep supporting by paying more than MSRP.

So end of the day, I rather see TSMC make extra 20% than stupid people paying scalper that difference. At least you know TSMC is investing it back into people and actually a positive force in the economy, unlike scalpers.

And get ready for things to get worse when MS release Windows 11 and and force people to have systems older than 4 years to upgrade. 2021 is the 1st year since 2014 that the industry expected to deliver over 500m computing units (PC/Laptop/Tablets) after almost 4 straight years hovering around 400m until 2020.
alpovs wrote: Why do you think demand is high? Supply is low, hence my question. Demand is the same. It's not that people started to want to buy two or three GPUs or cars at once.
Seriously, have you kept up with the news?

After no travel last year, rental agency ditched all their cars to stay liquid to stay in business. Now things are reopening, they are rebuying 2-3x more cars because they are short. Combined with COVID supply chain disruption and factory shut downs, we now have no cars. Check the auto sub forum, we now have a dealer asking for $59K for a 2 year old, 50k km Tundra while a new one is only $56K. And the same Tundra would have been sold for $55K USD in US easy. Things are seriously short. My neighbor sold his 1.5year old Ford Raptor and made $10K over the price he bought it for last year.

And until recent Chinese ban of crypto mining, every available GPU has been bought up for mining ops. 2-3 GPUs? Those are rookie numbers :D
Image
Last edited by Xtrema on Aug 30th, 2021 11:04 am, edited 2 times in total.
Deal Expert
User avatar
Apr 16, 2001
16225 posts
2896 upvotes
M1K3Z0R wrote: Tech will depreciate unless all innovation comes to a halt and we get stuck with what we've got.
That's not going to happen unless AMD can't progress and Intel stops trying again. I can't see that, now that AMD has a taste of making Intel their bitch.
Automatic down-votes: Eufy, D-Link, TP-Link, Newegg, Canada Computers, any Chinese-owned cellphone, laptop or IoT device.
Deal Fanatic
Sep 1, 2004
9196 posts
8442 upvotes
JAC wrote: That's not going to happen unless AMD can't progress and Intel stops trying again. I can't see that, now that AMD has a taste of making Intel their bitch.
AMD works off the back of TSMC. TSMC is the innovation engine for the world right now for CPU/GPU front. Intel got seriously screwed by last CEO which was an accountant. This new guy seems to be trying hard to get engineering back on track and at least seems to have a plan of attack. Still doubt execution.

And remember guys, besides COVID, the geopolitical spat between China and US will significantly impact us as well. As I mentioned before TSMC engineers are being poached at very high wage as China is throwing money around trying to get into chip making that it is making it expensive for everyone else. In the meantime, China isn't as cheap of a labor force as they were in the past and I seriously don't see a replacement. Vietnam isn't it as most job sent to Vietnam has now been all sent back to Shenzhen due to Vietnam can't execute under COVID (See upcoming Pixel 6 launch).
Deal Fanatic
Sep 16, 2013
6929 posts
4660 upvotes
SW ON
Xtrema wrote: Why do you think doing stuff online only in 2020/21 is a Canada only phenomenon. The whole world is the same.
You are wrong from the start because you listed only examples that had "we", "my" and "I". The worlrd is much bigger than people you know. Take Brazil, Russia, China, India as examples. The majority of the world population lives there. Schools weren't closed, no nationwide lockdowns after summer of 2020, only small fraction worked from home. That's what I meant.
Xtrema wrote: As a company of 1200, we bought 800 extra laptops last year to accommodate WFH. That's 3-4x the replacement rate of typical year.

My supplier is selling every Chromebook he can get his hands on to school board. That's 100k extra laptops that would have otherwise sitting on shelves of BestBuy collecting dust.

Now that's just cases I knows of in Calgary. Multiply these instances all over the world and you know why we have shortages.

What may have made it worse was crypto and decimate GPUs availability and then you add fuel to the fire by scalpers that people keep supporting by paying more than MSRP.

So end of the day, I rather see TSMC make extra 20% than stupid people paying scalper that difference. At least you know TSMC is investing it back into people and actually a positive force in the economy, unlike scalpers.

And get ready for things to get worse when MS release Windows 11 and and force people to have systems older than 4 years to upgrade. 2021 is the 1st year since 2014 that the industry expected to deliver over 500m computing units (PC/Laptop/Tablets) after almost 4 straight years hovering around 400m until 2020.



Seriously, have you kept up with the news?

After no travel last year, rental agency ditched all their cars to stay liquid to stay in business. Now things are reopening, they are rebuying 2-3x more cars because they are short.
Why would they rebuy 2-3x more cars? Why not the same amount of cars as they had before? Maybe one rental agency did this. I am sure most others didn't increase their number of cars. Again, if you are talking about Canada it's only a tiny fraction of the world.
Xtrema wrote: Combined with COVID supply chain disruption and factory shut downs, we now have no cars. Check the auto sub forum, we now have a dealer asking for $59K for a 2 year old, 50k km Tundra while a new one is only $56K. And the same Tundra would have been sold for $55K USD in US easy. Things are seriously short.
Yes, the question is why things are short. You are confusing consequences with causes. You are describing the consequences. I was wondering about causes. China didn't suffer from COVID much. Much of the chip-related stuff comes from China. I don't see many reasons for shortages. Although, lately I read about transportation issues. Ships don't sail, shortage of truckers in the US. That sounds more reasonable as a cause.
Xtrema wrote: My neighbor sold his 1.5year old Ford Raptor and made $10K over the price he bought it for last year.

And until recent Chinese ban of crypto mining, every available GPU has been bought up for mining ops. 2-3 GPUs? Those are rookie numbers :D
Mining has existed since forever. Do you think people suddenly decided to mine much more even before China banned crypto currencies? I don't see any evidence.
Deal Fanatic
Sep 1, 2004
9196 posts
8442 upvotes
alpovs wrote: Mining has existed since forever. Do you think people suddenly decided to mine much more even before China banned crypto currencies? I don't see any evidence.
Here alone shows that you are just arguing for arguing sake and you have 0 understanding and knowledge on the world's market.

Just like the people who bitch about gasoline rip off without understanding all the working components of supply chain.

Top