Following Samsung, will TSMC raise prices for all processes by 10~15%?

The strong demand for AI chips is reshaping the global foundry market’s pricing structure. After Samsung Electronics took the lead in raising foundry service prices, the market expects industry leader TSMC to follow suit with plans to implement a 10% to 15% price increase across all process nodes. This marks the entry of top chip manufacturers into a new cycle of sustained margin expansion.

Capacity shortage is the direct catalyst for this round of price increases. According to reports from TrendForce and Nomura Securities, TSMC completed a new round of price negotiations with clients by mid-2024, implementing up to a 15% price hike for specific 3nm (N3) processes in short supply during the second half of the year. By early 2027 at the latest, TSMC also plans to further increase prices by 5% to 10% on top of that for advanced processes such as N2, N3, and N5.

Expectations of price hikes quickly spread to the capital markets, prompting Wall Street institutions to significantly raise TSMC’s valuation. Citi, Bank of America, and Macquarie all raised their target prices for TSMC, with the highest reaching 4,200 New Taiwan dollars. Institutions generally believe that robust AI demand and increased pricing power will directly boost the long-term profitability of TSMC and its relevant supply chain.

This return of pricing power started with Samsung. According to a Reuters report, Samsung raised its foundry prices for 4nm and 5nm processes by 10% to 15% in July, and prices for mature 8nm processes rose by nearly 10%. Benefiting from TSMC’s spillover effect on capacity, Samsung’s long-loss-making foundry business reached a crucial turning point.

Capacity Crisis: TSMC Raises Foundry Quotes Across the Board

TSMC’s advanced process capacity is currently running at full load. Market data shows that its N2 and N3 process chips are almost entirely reserved by Apple and Nvidia. In response to the demand for the next-generation Nova Lake desktop processors launching in early 2027, competitor Intel, in addition to using its own 18A process, will also ramp up purchases of N2X process chips from TSMC, further intensifying the capacity crunch.

Against the backdrop of advanced process supply falling short of demand, TSMC’s price increase is extending to its entire product range. According to market research reports, besides significant price hikes for N3 processes, mature process chips such as N12, N16, and N28—unchanged for three consecutive years—will also see catch-up increases, with the maximum hike reaching up to 10%. This means that starting from the second half of this year, TSMC will gradually and comprehensively adjust prices upward for all foundry chips under its portfolio.

A Citi Securities report notes that, driven by the strong orders from global technology giants for AI chips, TSMC’s advanced process capacity utilization will remain high. The rigid demand for N2 and N3 chips, in particular, will support steadily rising foundry prices through 2027. It is revealed that the starting price per wafer of TSMC’s N2 process has reached $30,000, enjoying a 10% to 20% premium over N3.

Capital Expenditure at Record Highs, Wall Street Significantly Raises Earnings Expectations

To further widen the technology and scale gap with Samsung and Intel, TSMC is accelerating its capacity expansion.

A CLSA report suggests TSMC’s capital expenditure is expected to reach $80 billion in 2027 and expand to $90 billion in 2028. This year, TSMC has already raised capex to a record $52 to $56 billion and announced in July it would increase U.S. investment to $265 billion, planning to build multiple wafer fabs and advanced packaging plants in Arizona.

Strong pricing power and capacity expansion are driving foreign investment banks to be unanimously optimistic about its profit outlook. Bank of America, Goldman Sachs, and Citi have reached broad consensus on TSMC’s earnings per share (EPS) from 2026 to 2028, expecting it to cross the 100 New Taiwan dollar threshold in 2026 and challenge 170 to 200 New Taiwan dollars in 2028. The ratings given by various institutions are all “Buy” or “Outperform,” with target prices centered between 3,700 and 3,800 New Taiwan dollars.

Market optimism has also spread to the supply chain. Although TSMC’s share price recently fell to 2,375 New Taiwan dollars due to a correction in the U.S. Philadelphia Semiconductor Index, institutions believe that with revenue reaching historical highs and the expectation of a comprehensive 10% to 15% price adjustment, now is an excellent opportunity to buy on the dip.

Meanwhile, TSMC’s expansion plans have already driven suppliers in semiconductor equipment, materials, and cleanrooms to record double-digit revenue growth in the first seven months of this year, and the industry’s visibility now extends beyond 2027.

Samsung Fires the First Shot in Price Increases: Advanced and Mature Processes Raised Simultaneously

According to Reuters, in July, Samsung Electronics implemented price hikes on new orders for some advanced process foundry services, with the highest increase reaching 15%.

Specifically, the price of 4nm (SF4) chips for Mainland China and U.S. customers increased by 10% to 15%, 5nm SF5 wafer prices also rose by 10% to 15%, and 8nm process prices climbed by nearly 10%.

From a market perspective, Samsung’s price hike carries significant signaling value. According to Counterpoint, in the first quarter of 2026, TSMC will hold about a 73% share of global foundry revenue, Samsung about 7%, and SMIC about 5%. Samsung’s foundry division has been posting losses since 2022, struggling to narrow the gap with TSMC.

Samsung’s foundry customer base is growing rapidly, providing solid support for its price hikes. Tesla and Apple both signed chip manufacturing agreements with Samsung last year. In July this year, Samsung announced a partnership with Broadcom for AI chip production. Nvidia CEO Jensen Huang stated in March this year that Samsung would provide foundry services for its new AI inference processors. In addition, Google is currently in negotiations with Samsung regarding the use of the SF4 process for chip production.

Samsung expects advanced processes to account for over half of its foundry revenue this year, with AI and high-performance computing applications exceeding 30%, up from 15% to 20% at the end of 2025. The SF4 production line at Samsung’s Pyeongtaek fab in South Korea has been running at full capacity since the end of last year, producing logic chips for customers such as Qualcomm, and providing base chips for Samsung’s own multi-layer high-bandwidth memory (HBM) chips.