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According to DIGITIMES Asia, European chipmaker STMicroelectronics has notified its Asia-Pacific distributors that it will raise prices for all of its product lines in the second quarter of 2022, including the company’s backlog, industry sources said. This move is likely to push automotive and industrial IC IDMs to follow suit.

In a letter to its distribution partners, STMicroelectronics said that unfavorable economic and geographical conditions have made raw material costs, energy costs and logistics costs continue to increase, so the company has been unable to absorb its total expenditures and can only choose to increase prices.

According to reports, in the fourth quarter of 2021, the operational process of STMicroelectronics orders has been extended to customers for 18 months, and STMicroelectronics has also increased chip prices. Previous price hikes for ST's chips have caused chipmakers, including Taiwanese chipmakers, to pass on their increased costs to recipients of finished products.

At present, the sources said, Europe's Infineon, NXP and Japan's IDM manufacturers will follow STMicroelectronics to raise chip prices. The source added that Renesas Electronics, the world leader in automotive chips, raised chip prices in January and is now considering continuing to raise prices. This reflects the current rising chip costs in the industry and the tight supply of automotive chips.

According to people familiar with the matter, American analog chip giant Texas Instruments (TI) may become one of the first IDM manufacturers to raise chip prices in the second quarter of 2022.

According to DIGITIMES Asia, citing relevant news reports, in addition, the global foundry leader TSMC plans to increase the price of its 8-inch foundry services by 10%-20% starting from the third quarter of 2022. It is estimated that TSMC accounts for 60%-70% of the total manufacturing orders issued by automotive IC IDM manufacturers.

Relevant sources said that this year, the demand in the chip market has been disappointing, the cost of chip production is high, and Taiwanese chip design companies are unlikely to raise chip prices quickly.

The source also said that Taiwanese chip designers had raised prices for their chips in the previous two years, but this year there was no bargaining chip when negotiating prices with customers. Many chip designers in Taiwan will face downward pressure on gross margins and profits in 2022.