TSMC Raises Mature Process Prices for First Time in Three Years, AI Demand Spillover Ignites Full-Scale Semiconductor Inflation

TradingKey - The global semiconductor industry is experiencing an unprecedented price storm, with the wave of price increases gradually spreading from the advanced processes required for AI chips to mature processes.

According to reports from multiple authoritative media outlets, including Taiwan's Economic Daily News, TSMC ( TSM) plans to raise mature-process wafer foundry prices starting in January 2027, marking its first adjustment to mature-process quotes in over three years.

This news not only signifies that the pricing logic of the semiconductor industry is shifting from supply-and-demand-driven to cost-driven, but it will also trigger a cost-related chain reaction throughout the entire industry chain, and end consumers may ultimately bear a portion of the costs.

Final Plan to Be Finalized in Fourth Quarter

Multiple IC design houses have revealed that they have recently received notifications from TSMC regarding plans to adjust foundry prices for mature processes, with the adjustments set to take effect in January 2027.

The price increase is currently expected to be in the single-digit percentage range, with final pricing to be finalized in the fourth quarter, varying by customer and product line. While TSMC has not officially confirmed the news, the market generally believes that this price hike is an inevitable result of industry trends.

Prior to this, TSMC had already raised advanced process quotes multiple times. At the beginning of 2026, TSMC notified customers that prices for all sub-7nm cutting-edge process products would be raised by 5% to 10%; in June, further reports suggested that prices for the 3nm process would be hiked by up to an additional 15%.

This price hike for mature processes could signify that TSMC's price-increase cycle is fully extending from AI chip-dominated advanced processes to the broader mature process sector.

Dual Drivers of AI Demand Diffusion and Cost Pressures

The core driving force behind the price hikes in mature processes lies in the spillover effect of AI demand and continuously rising operating costs. According to an analysis by the Economic Daily News, the AI boom's boost to semiconductors has extended from the advanced processes relied upon by GPUs and high-performance computing chips to mature process products such as power management ICs (PMICs) and power devices.

A report released by TrendForce shows that the fields of AI mature processes, power, and power management chips are undergoing a robust upcycle triggered by AI demand.

Power management chips and power discrete components still heavily rely on 8-inch platforms. With major manufacturers like TSMC and Samsung Electronics continuously cutting production or shifting portions of their 8-inch capacity, capacity is tightening and utilization rates continue to climb. Consequently, related foundry prices are set to rise across the board between the first and second quarters of 2026, with average increases ranging from 5% to 15%. The industry is even preparing for a third wave of price hikes from the second half of 2026 to 2027.

Meanwhile, electricity, labor, and environmental compliance costs in the Taiwan region have steadily risen in recent years. At the same time, TSMC is building wafer fabs in the U.S., Japan, and Germany, bringing higher capital expenditures and depreciation pressures.

TSMC Chief Financial Officer Wendell Huang previously stated that inflation is driving up the company's operating costs, and he did not rule out the possibility of raising chip prices. Even though mature process equipment has completed most of its depreciation, overall operating costs continue to rise, and the company needs to maintain profitability by raising its quotes.

Full Industry Chain Cost Transmission

TSMC's price hike plans will have a profound impact on the entire semiconductor supply chain. In the first half of this year, packaging and testing companies have raised their prices one after another, driving overall chip production costs steadily upward.

TSMC's mature process price hike plans for 2027 are expected to further weigh on the cost burden of IC design companies and trigger a new round of price increases for end-market chip products.

IC design houses stated that they had already negotiated product price increases with clients in the first half of this year due to rising quotes for mature processes from packaging and testing firms and other foundries. If TSMC's mature process prices are confirmed to rise next year, they will inevitably need to negotiate further price hikes with clients, who will then pass the increased costs on to end consumers, creating a ripple effect.

UMC, PSMC, and VIS have previously raised mature process prices multiple times. TSMC's follow-up will provide mature process foundries with stronger market justification when seeking further price hikes, and the overall pricing landscape of the mature process foundry market is expected to remain strong.

Nomura expects that TSMC's price hikes will provide stronger pricing support for mature process foundries such as UMC, PSMC, and VIS, driving a new wave of price increases across the industry.