More Expensive Chips, More Expensive Devices – TSMC is Changing the Rules!

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, has announced an 8 to 10 percent increase in prices for its most advanced processors, effective from 2026. The changes will affect chips used in flagship smartphones, high-performance computers, and artificial intelligence systems, including Apple processors and key chips from major Android manufacturers.

The largest cost increase concerns the new 2-nanometer production process, which will power next-generation devices. Higher costs are driven by TSMC’s substantial investments in factories and advanced equipment required to manufacture these chips. Smartphone and computer manufacturers will need to decide whether to absorb these higher costs within their margins or pass them on to consumers, potentially impacting the prices of new devices.

Apple plans to use 2-nanometer processors only in select iPhone 18 models, indicating that costs may limit the availability of the latest technology across the full product range. Similar challenges are expected for Samsung, Qualcomm, and MediaTek, which could result in higher prices for flagship Android smartphones in 2026.

The price increases also have financial implications for TSMC. Higher chip prices will contribute to revenue growth, and thanks to its dominant market position, the company can maintain or even improve profitability despite rising production costs. TSMC’s clients will need to decide whether to pass higher costs to consumers or reduce their own margins, affecting device prices or hardware manufacturers’ profitability. Over the longer term, TSMC’s pricing policy reflects broader industry trends – higher costs for advanced chip production are becoming the new norm, while the company benefits from growing demand for AI and high-performance chips, strengthening its financial and market position.

Source: xStation5