According to Bloombergthe South Korean giant Samsung has just announced a 20% price increase on the manufacture of its semiconductors. This should have a direct impact on the selling price of certain everyday products.
+20% on the purchase price of semiconductors
Samsung is the latest semiconductor maker to announce a price hike. Earlier this year, the Taiwan Semiconductor Manufacturing Company (TSMC) also implemented a steep tariff increase on semiconductor manufacturing. This time it’s Samsung’s turn. Customers of the South Korean giant will soon have no choice but to pay more for their semiconductors. The company is already in discussions with its customers about the application of an increase which could be around 15 to 20%.
DeepMind: a new AI capable of performing more than 600 tasks
The semiconductor market is in turmoil. Between 2020 and 2021, the demand for electronic components has increased significantly. This market now weighs 550 billion euros. According to Gartner analysts, “The rise of 5G smartphones and the combination of strong demand and rising commodity prices have pushed up semiconductor prices. This has contributed to significant revenue growth in 2021”. Over the past year, it is precisely Samsung that takes first place in the ranking of semiconductor vendors.
Samsung is spending more and more
The price increase at Samsung certainly has a direct link with a recent investment of 175 billion euros made a few months ago. During the summer of 2021, the technological giant announced that it wanted to do everything to maintain its leading position in the manufacture of semiconductors and strengthen its global presence in biopharmaceuticals, artificial intelligence, next-generation telecommunications and robotics. Even if its revenues are up 28% between 2020 and 2021, such an expense inevitably has an impact on the company.
Separately, Samsung achieved its best-ever numbers on the semiconductor portion in the first three months of 2022. While the company is optimistic about its future, it also expects the global shortage of components continues to impact its business. Manufacturing costs are also increasing by 30% on average, meaning foundries have to charge more to make a profit. According to Masahiro Wakasugi, analyst at Bloomberg, “It’s an inevitable move for Samsung. Some customers will agree to pay a higher price if they can get chips sooner than others”.