Why Is TSM Stock Rising Today? Report Says TSMC Plans To Raise Chipmaking Prices In 2027

According to a report by Nikkei Asia, TSMC has finalized discussions with customers on price increases ranging from 5% to 10% for both advanced and mature chip production.

• TSMC may levy an additional 10%-15% surcharge on top of the base price hike for orders of high-performance computing chips beyond volumes previously agreed with customers.
• The report states that TSMC has already informed its clients of the price hikes, with negotiations completed this month.
• TSMC’s planned price increases reflect rising costs for raw materials, chipmaking equipment and construction of new fabrication plants overseas, according to the report.

Shares of Taiwan Semiconductor Manufacturing Co. (TSM) were up nearly 4% in Tuesday’s pre-market trade after a report stated that the semiconductor foundry could raise chipmaking prices next year.

According to a report by Nikkei Asia, TSMC has finalized discussions with customers on price increases ranging from 5% to 10% for both advanced and mature chip production.

High-Performance AI Chip Orders Could See Bigger Hikes

TSMC's biggest AI customers could face the steepest increases. The report said orders for high-performance computing chips beyond previously agreed volumes may carry an extra 10% to 15% surcharge on top of the base price hike, reflecting relentless demand for AI accelerators used in data centers.

This could result in total price increases exceeding 10% for some advanced AI chip orders.

Advanced chip nodes, such as 7-nanometer and below, accounted for 77% of TSMC’s revenue in the second quarter (Q2). More mature nodes, such as 12nm, 16nm and 28nm accounted for the remaining 23% of the revenue.

The report states that TSMC has already informed its clients about the price hikes, with the negotiations having been completed this month. The new prices are expected to come into effect in 2027.

Why TSMC Is Raising Prices

The planned price increases reflect rising costs for raw materials, chipmaking equipment and construction of new fabrication plants overseas, according to the report.

TSMC has also been ramping up investments in cutting-edge manufacturing, including its 2-nanometer process and a $100 billion expansion in Arizona.

TSMC manufactures chips for many of the world's biggest technology companies, including Nvidia Corp. (NVDA), Apple Inc. (AAPL), Advanced Micro Devices Inc. (AMD), Qualcomm Inc. (QCOM), Amazon.com Inc. (AMZN) and Alphabet Inc.’s (GOOG, GOOGL) Google.

The planned price increases could ripple across the AI and consumer electronics supply chains, though the magnitude of the impact will depend on customer agreements and purchasing commitments.

TSMC Accelerates Arizona Facility Builtout To Capitalize On AI ‘Megatrend’

During an interview with CNBC last week, TSMC CFO Wendell Huang said that the world’s largest contract chip foundry is accelerating its Arizona facility buildout to capitalize on the AI “megatrend,” committing an additional $100 billion to expand its manufacturing footprint in the U.S.

TSMC’s total investment pipeline in Arizona is now at $265 billion. “We’re seeing this strong-structure, multi-year demand, and we do not plan to leave any food on the table for anybody else,” Huang said.

Huang sees the 2nm technology as TSMC’s revenue driver in the next quarter, adding that it is going to be “bigger and bigger” over the next few quarters.

Last week, TSMC reported NT$1.27 trillion ($39.44 billion) revenue in Q2, beating Wall Street estimates of NT$1.26 trillion, according to Fiscal.ai data. Adjusted earnings per share (EPS) came in at NT$27.25, beating an estimated NT$24.29.

What Retail Traders Think Of TSM Stock

Retail sentiment on Stocktwits around TSMC trended in the ‘extremely bullish’ territory at the time of writing.

TSMC stock is up 34% year-to-date and 67% over the past 12 months. The iShares Semiconductor ETF (SOXX) is up 112% over the past 12 months, while the Global X Artificial Intelligence & Technology ETF (AIQ) is up 33%.

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