TSMC Reportedly Planning Up to 20% Price Hike for Advanced Chip Packaging

Taiwan Semiconductor Manufacturing Co. (TSMC) is preparing to raise prices for its advanced chip packaging services by 10% to 20% due to overwhelming demand driven by the artificial intelligence boom, according to a Tuesday report from the Commercial Times citing industry sources.

AI Boom Strains Supply

The price increase is expected to affect TSMC's Chip-on-Wafer-on-Substrate (CoWoS) packaging technology, a critical component in the production of high-performance AI processors. Surging orders for these advanced chips, which extend beyond GPUs to include server CPUs and custom application-specific integrated circuits (ASICs), have created significant capacity constraints.

The report notes that foundries and outsourced semiconductor assembly and test (OSAT) providers are all facing intense pressure. This is compounded by longer testing times required for complex AI chips, further tightening available capacity across the supply chain.

Ad

Market Impact and Outlook

The supply crunch is having a ripple effect, with lead times for essential chipmaking equipment lengthening to six to eight months from a previous range of three to six months. This indicates that suppliers are struggling to scale up production quickly enough to meet the explosive growth in demand.

For investors, the reported price hike underscores TSMC's significant pricing power in a market where demand for cutting-edge technology far outstrips supply. While beneficial for TSMC's margins, it could translate to higher costs for AI chip designers who rely on its services. To address the bottleneck, TSMC is aggressively expanding its CoWoS capacity, which analysts cited by the newspaper estimate will exceed 130,000 wafers per month in 2026 and reach 200,000 in 2027.