Industry sources said potential price increases by Chinese chip foundries such as TSMC could give Samsung Electronics a competitive advantage in terms of price.
TSMC Chairman C. C. Wei cited rising costs as the reason for the company's price increase at a June 4 shareholders' meeting. Nvidia CEO Jensen Huang also agreed with this view, believing that current chip foundry prices are too low.
Industry observers expect TSMC to increase prices in the second half of 2024. It is reported that TSMC's 3nm process orders are full until 2026, and prices are expected to rise by more than 5%. The price of chips on wafers on substrates (CoWoS) is also expected to rise by up to 20%.
Against this backdrop, some have pointed out that Samsung Electronics could benefit from potential price increases as some customers could switch from TSMC to the South Korean chip giant. "Samsung Electronics is the only foundry that can replace TSMC," said Ahn Ki-hyun, executive director of the Korea Semiconductor Industry Association.
With TSMC's factory utilization climbing to 100%, more customers are expected to outsource production to Samsung Electronics. "With capacity utilization likely to reach 100%, customers will inevitably need to diversify some of their business volumes," said Park Sang-woo, an analyst at Shinyoung Securities.
However, Samsung Electronics may focus on its gate-all-around transistor (GAA) process or turnkey strategies rather than short-term factors such as price and utilization. The tech giant also boasts that it is the only chip company in the world to offer cutting-edge architectures so far.