Semi Chip Prices Expected To Rise Through All Of 2021
It shouldn't be any surprise that given the current shortage in semiconductors, prices could continue to rise for the better part of 2021.
This month alone, suppliers like Japan’s top silicone producer, Shin-Etsu Chemical Co. Ltd. marked up prices between 10% and 20%, according to Caixin, who reported that growing input costs and supply disruptions could be tide that continues to push up prices.
Shin-Etsu blamed their price hikes on the rising cost of silicon metal, which they said was a result of demand out of China.
Names like Semiconductor Manufacturing International Corp. (SMIC), United Microelectronics Corp., and Powerchip Semiconductor Manufacturing Corp. have all announced intentions to raise prices in similar fashion. Taiwan Semiconductor Manufacturing Co. Ltd. has also said prices are coming in the form of suspending wafer price reductions beginning December 31 this year.
One Jiangsu diode manufacturer said it's suppliers had raised prices five times since the second half of 2020. The hikes represented a total markup of between 30% and 40%, including a new 10% hike that came into effect last week. The same firm's inventory was at "half their normal level", Caixin reported.
One semiconductor salesman said: “The whole industry is scrambling for (chips), and it’s hard for us to make a purchase."
We have written for the last couple months about how the shortage has wreaked chaos on the auto industry so far in 2021.
Just weeks ago we noted that Samsung was the latest to join the chorus of companies stating they were being negatively affected by the semi shortage. The company said the current crisis is "very serious" and that it "poses a slight problem" for the electronics company heading into the second quarter. The company continues to try and address supply issues, Reuters reported that CEO and mobile chief Koh Dong-jin said at Samsung's recent annual general meeting.
Recently, we also wrote about how difficult it was becoming for U.S. companies to export chipmaking hardware to China due to trade restrictions. We also documented weeks ago how critical Taiwan would be in getting the semiconductor industry back up and running. We noted that Taiwan Semiconductor Manufacturing was rushing to try and build new facilities through the Chinese New Year in order to meet demand.
TSMC is one of the biggest suppliers of chips to company like Apple, Google and Qualcomm. As a result of a worldwide shortage in chips that was brought on due to the pandemic, they are now rushing to try and get a new factory in the southern Taiwanese city of Tainan built. Construction the new facility will take place throughout 2021, with completion expected in 2022.
Earlier in 2021 we noted that the semi situation had been turning dire and was now being referred to as the "most serious shortage in years". Qualcomm's CEO said last month that there were now shortages "across the board".
And it wasn't just Qualcomm executives speaking out: other industry leaders warned in recent weeks that they are susceptible to the shortages. Apple said recently that its new high end iPhones were on hold due to a shortage of components. NXP Semiconductors has also warned that the problems are no longer just confined to the auto industry. Sony also said last week it may not be able to to fully meet demand for its new gaming console in 2021 due to the shortage. Companies like Lenovo have also been feeling the crunch.