STMicroelectronics Asia Pacific has notified its distributors about price increases for all its product lines in the second quarter of 2022, which may encourage other automotive and industrial IC IDMs to follow suit, according to industry sources.
STMicroelectronics Asia Pacific said in a letter to its distribution partners that unfavorable economic and geographical conditions have led to the ever-increasing costs of raw materials, as well as energy and logistics costs, with total expenses reaching a level where the company cannot absorb them in full, the sources indicated. The price hikes will also be applicable to the company's existing backlog of orders.
Fellow Europe- and Japan-based IDMs including Infineon and NXP are expected to follow suit in raising their chip prices to reflect rising costs and the still-tight supply of automotive chips, the sources noted. Renesas, which just raised its chip prices in January, is also considering another price hike, the sources added.
Analog IDM Texas Instruments (TI) is also expected to be among the IDMs poised to raise their chip prices as early as the second quarter, the sources said.
STMicro raised its chip prices in the fourth quarter of 2021, when its order visibility had been extended to as long as 18 months, the sources indicated. STMicro's previous price adjustments already prompted chipmakers including Taiwan-based ones to pass increased costs onto downstream clients.
However, Taiwan-based IC design houses are unlikely to raise their chip prices anytime soon due to disappointing end-market demand thus far this year, according to the sources. Many Taiwan-based fabless chipmakers intend to maintain their quotes despite higher production costs.
Taiwan-based IC design houses were capable of raising their chip prices over the past two years, but have less bargaining chips when negotiating prices with customers this year, the sources indicated. Many of Taiwan's fabless chipmakers may see their gross margins and profits for 2022 come under downward pressure.
In related news, pure-play TSMC reportedly plans a 10-20% price hike for its 8-inch foundry services, with the new prices to be effective starting the third quarter of 2022. TSMC grabs an estimated 60-70% of total contract manufacturing orders released from automotive IC IDMs.