TSMC’s 3nm and Beyond Chips May See Price Hikes, but Demand Remains Unshaken

The global demand for advanced semiconductors continues to surge amid the ongoing AI boom and renewed consumer upgrade cycles in the smartphone and computing industries. At the center of this supply rush stands TSMC (Taiwan Semiconductor Manufacturing Company), whose advanced fabrication nodes, particularly 3nm and 5nm, are reportedly operating at full capacity.

According to a new report from the Taiwan Economic Daily, TSMC has already begun negotiating new supply contracts with its major clients and is considering a price increase of up to 10% for its most advanced chip processes starting next year.

Historically, TSMC has maintained a reputation for moderate and infrequent price adjustments, largely to preserve its long-term partnerships with industry giants such as Apple, NVIDIA, AMD, and Qualcomm. However, the upcoming price revision reflects both rising production costs and a global shift in demand toward high-performance computing (HPC) and AI workloads, sectors that now account for a growing share of TSMC’s capacity.

For years, mobile chips dominated TSMC’s order books. Now, with AI data centers, graphics processors, and custom silicon driving exponential growth, the company faces capacity bottlenecks that are forcing it to reassess its pricing strategy.

TSMC’s increasing capital expenditures are another major factor in the potential price hikes. The company is investing heavily in overseas fabs, including its Arizona facility in the United States and a new plant in Kumamoto, Japan. These ventures have significantly increased operating expenses, partly due to higher construction, labor, and material costs outside Taiwan.

Despite these challenges, TSMC remains in a strong negotiating position. With few direct competitors at its level of technological advancement, the firm holds substantial leverage in setting contract terms. Even with a 10% price increase, demand from global tech leaders is expected to remain robust as they race to secure chip supply for next-generation AI accelerators, CPUs, and smartphones.

Market analysts view the rumored price increase as relatively modest, especially given the cost and complexity of 3nm and upcoming 2nm production. TSMC’s advanced nodes are not only more power-efficient but also critical to achieving performance gains across AI, mobile, and HPC workloads, leaving customers with little choice but to absorb the higher costs.

While the semiconductor industry continues to grapple with economic and geopolitical uncertainty, one thing is clear: TSMC’s dominance at the leading edge of chip fabrication remains unchallenged, and even rising prices won’t slow down the tidal wave of demand for its cutting-edge processes.

Would you consider TSMC’s potential 10% chip price increase fair given the high costs of 3nm and future nodes, or do you think chipmakers should absorb more of these costs themselves?