TSMC plans to increase prices on advanced process nodes by up to 10% next year to finance construction of new fabrication facilities
TSMC, the world's largest semiconductor manufacturer, has announced plans to increase prices for wafers produced using its advanced process technologies starting in 2026. This decision comes as the company prepares to invest heavily in its next-generation fabrication facilities.
In the second quarter of 2025, TSMC's High-Performance Computing (HPC) segment accounted for 60% of its earnings, while System-on-Chips (SoCs) for smartphones accounted for 27%. The company's N5/N4 and N3 process technologies, which include advanced process technologies, accounted for around 50% of the company's wafer processing revenue during this period.
TSMC's commitment to innovation is evident in its plans to rapidly expand N2/N2P/A16-capable capacity. By 2028, the company aims to increase its production from less than 20,000 wafer starts per month in Taiwan to 200,000 at multiple fabs in Taiwan and one in the U.S. This expansion will come at a cost, with TSMC expected to increase its investment costs for building new factories in the USA to around 100 billion US dollars by 2026.
The price increase will apply to the N5, N4, and N3-series process technologies. TSMC is rumored to be planning to charge $30,000 per N2 wafer and $45,000 per A16 wafer. Customers focusing only on the latest nodes would bear the full extent of the increase, while customers who order both legacy and cutting-edge nodes may be eligible for special pricing benefits.
The upcoming price adjustments are said to be implemented uniformly across all geographical sites. Chip production at TSMC's Fab 21 in Arizona already comes at a roughly 15% premium compared to the company's fabs in Taiwan. This price hike is one of the ways TSMC aims to fuel its massive leading-edge production capacity, as the company needs tens of billions of dollars to support such expansion.
Intel's 18A is not even qualified for mass production by third parties at Arizona fabs, and there is limited interest in 18A outside of Intel. In contrast, TSMC's customers, such as AMD and Nvidia, seem ready for price hikes for TSMC's 3nm and 4nm/5nm-class technologies.
Smartphone processors are expected to see a 5% increase, production quotes on CPUs are projected to rise by 7%, and large processors for AI and HPC applications will see a 10% increase. Assuming an average increase of 7.5% for N3 and N4/N5, TSMC could generate an 'extra' $9 billion in revenue if its N3 and N4/N5 absolute revenues remain at current levels.
TSMC's investment in the USA does not stop at new fabs. The company also plans to build an advanced packaging facility nearby and an R&D center, which may cause CapEx for 2026, 2027, and 2028 to exceed $42 billion.
In conclusion, TSMC's price hikes for advanced process technologies and significant investments in new fabrication facilities demonstrate the company's commitment to innovation and leading-edge production. With no rivals expected to match TSMC's 2nm-class fabrication technologies for quite a while, the company is well-positioned to continue its dominance in the semiconductor industry.
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