This allows them to raise prices as high as they want.
Let’s use an example.
Imagine a sizable TSMC customer not in the Top 3, but maybe in the Top 10.
They likely pay TSMC $20,000 per wafer today, with lower-volume customers paying closer to $25,000.
Let’s say this company has a chip that is 170 mm2.
Now suppose TSMC raises its price to this customer to $40,000 for its next process.
The cost per chip, however, jumps to $107.
This is the heart of the Moore’s Law slowdown density increases now greatly lag price increases.
The hardest hit will be customers with smaller volumes, spanning from start-ups to hyperscalers.
For many, Moore’s Law becomes extremely challenging.
The fact that they haven’t suggests they won’t in the future.
However, conditions are changing.
Until recently, a cautious and paranoid TSMC needed to worry about Intel or Samsung becoming competitive again.
That now seems increasingly unlikely.
And this is why Intel Foundry matters.
But look ahead a few years, to a world where TSMC can freely raise prices.
In that scenario, everyone will be desperately searching for an alternative.
Masthead credit:Fritzchen Fritz
