TSMC recently reported plans to raise the prices of its foundry services by an expected 10% increase, which quickly drew widespread attention in the industry. NVIDIA's CEO, Jensen Huang, expressed his recognition of TSMC's advanced process technology in an interview, saying that despite the high cost, "it is definitely worth the money." This statement is regarded by the industry as a strong support for TSMC's pricing strategy and also reflects the close cooperative relationship between the two companies.
Huang Rengxun emphasized that building new wafer fabrication plants and developing processes below 2 nanometers is not only extremely complex but also costly. However, for all customers, these costs are fair and consistent. After a meeting with TSMC Chairman Wei Zhejia and his team, Huang Renheng publicly expressed his support for TSMC's new offer. Semiconductor industry insiders analyzed and pointed out that the factors behind TSMC's decision to adjust prices include the increase in the cost of building factories in the United States, global inflationary pressure, exchange rate fluctuations, and the rise in investment in technological research and development. In particular, the price of 4-nanometer process chips produced in the United States may increase by 30% to reflect the actual cost of "Made in the USA".
TSMC executives mentioned at a recent financial report meeting that the revenue of AI processors (including cpus, AI accelerators and Gpus, but excluding network connections, edge computing and AI applications on end devices) is expected to double this year and grow at a compound annual growth rate of nearly 45% from 2024 to 2029. Given the strong market demand, in order to meet the huge capital expenditure requirements and maintain a reasonable profit margin, it has become inevitable for TSMC to adjust its pricing strategy.
According to supply chain sources, NVIDIA has been included in TSMC's first batch of customer lists for its 2-nanometer process technology, which will be used in the production of next-generation AI chips in the future. With the continuous advancement of manufacturing technology, the technical difficulty and failure risk have also increased, making it an inevitable trend for the price of foundry services to keep rising.
Data provided by electronic design automation (EDA) tool suppliers show that the success rate of the first tape-out is significantly declining. The success rate was approximately 30% in the past, but it dropped to 24% between 2023 and 2024, and is expected to further decline to 14% by 2025. The main reason lies in the fact that chip design is becoming increasingly personalized, the verification cycle is prolonged, and the risks and financial burden of research and development are increased.
Most integrated circuit design companies believe that with the advancement of process technology, the cooperative relationship between foundries and customers has become more solid. Due to the fact that changing suppliers requires a significant amount of time, manpower and resources, and the increasing reliance on advanced manufacturing processes, manufacturers are more inclined to establish long-term cooperation with experienced and technologically mature suppliers to ensure a favorable position in the fierce competition of AI technology and performance.
In addition, IC manufacturers also pointed out that the principle that "the larger the purchase volume, the lower the unit price" also applies to TSMC. For major clients like NVIDIA, although the price increase brings cost pressure, they can gain technological advantages and production progress guarantees through large-scale procurement, thereby alleviating some of the negative impacts brought about by the price hikes.
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