Daily Authority: Less low-end 📉

It comes all year round. We learned about on August 26th DigiTimes ($) reports that the largest semiconductor wafer maker, TSMC, saw prices increase as much as 20% in 2022:

• “TSMC has announced a price increase of around 10% for its sub-16nm process manufacturing to its customers, with the new prices expected to apply from 2022 according to sources from IC design houses.”
• Today there is another report that adds a confirmation over Nikkei Asia: “Taiwanese semiconductor company TSMC – the maker of chipsets used by Apple, Qualcomm and Nvidia – will increase its manufacturing fees by up to 20% in 2022. The increase is reportedly due to several factors including overwhelming demand and logistics. ”In the race for smaller manufacturing processes. Other chip manufacturers are also feeling this pressure. “
• Funnily enough, part of TSMC’s decision could be to avoid “double bookings” where smart chip customers “order more chips than they actually need in hopes of securing line space and support from contract chipmakers”.
• When that happens, there is uncertainty about the actual demand, so there are reports that it will be weeded out by just making booking fab space expensive.
• In addition: “The report also suggests that Qualcomm and MediaTek’s cost of sales will increase by 60% between October 2020 and June 2021, and electronics will have to do even more.”

What that means:

• Dale Gai, director of research at Counterpoint Research, said theNikkei The following: “The net profit margin for smartphone manufacturers excluding Apple is only about 5 to 10%. In that case, rising chip costs will definitely push all players in the industry to launch high-end handset models over the next year to offset the cost impact rather than focusing on midrange or low-end phones. “
• In view of the higher costs in the absolute displacement world of mid-range and low-end devices, smartphone manufacturers can therefore switch to devices with higher specifications, where more margin is available.
• And that could hurt consumers of low-end devices.
• So unless it is about bottlenecks that create delays, they are forcing decisions about cell phone profitability.
• Once again the message seems to be: If you want something now and don’t want to take any chances, you may have to get on board soon …
• Nevertheless, there can be an oversupply at some point when the demand becomes normal? Maybe?