The world's largest contract chipmakers have warned customers that they plan to increase prices by as much as 20 percent.

Taiwan Semiconductor Manufacturing Company (TSMC), United Microelectronics Corp. (UMC), and Samsung are warning clients of the price hikes, citing inflation concerns, rising power and components costs, and high interest rates.

Compounding matters is the global uncertainty caused by the war in Ukraine, and the ongoing impacts of Covid-19 lockdowns in China.

TSMC Fab 5
– Wikimedia Commons/Peellden

Samsung could increase prices by 15-20 percent, depending on the process node, Bloomberg reports. The older the chip technology, the higher the price rise.

The price bump is expected to be enacted in the second half of this year, once it has finished negotiating with its clients.

TSMC and UMC plan smaller, single-digit, price increases - however, while Samsung kept prices steady last year, both Taiwanese firms increased costs last year.

The world's largest contract chipmaker, TSMC enacted its biggest price increase in a decade last August, bumping prices by 20 percent as it looked to fund a $100 billion+ factory expansion amid a global chip supply crunch.

Now it is aiming for a 5-8 percent price range, again depending on the process technology, Nikkei Asia reports.

That price hike is expected to go into force from the beginning of 2023.

Last year the company also said it would stop its usual practice of lowering prices each quarter for its chip design clients after their products go into mass production.

While the global chip shortage is expected to last for several years yet - particularly as equipment shortages slow the rollout of new factories - consumer demand is changing, which may impact how the shortage is felt.

At the beginning of the pandemic, demand for home computing equipment soared. Now, with many consumers running usable equipment, and growing economic uncertainty, there are signs that demand for smartphones and PCs is waning, TSMC's chairman warned in late March.

Last week, China's largest chipmaker, Semiconductor Manufacturing International Corp (SMIC), said that demand for such products "dropped like a rock" - however, the company is more acutely impacted by the Ukraine war, as it has customers in Russia and Ukraine, and more vulnerable to Chinese lockdowns that have closed shops.

Globally, despite consumer demand slowing, chipmakers expect to be supply constrained. Cloud server chip and 5G networking gear demand are expected to continue to grow, even in a slowing economy.

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