Samsung in talks to hike chipmaking prices by up to 20%

Samsung considering increasing for chip manufacturing by up to 20% this year, in an effort to cover rising costs

Samsung Electronics is in talks with clients about hiking prices for chip contract manufacturing by up to 20% this year, Bloomberg reported on Friday.

The move, expected to be applied from the second half of this year, is part of an industry-wide push to raise prices to cover rising materials and logistics costs, Bloomberg said, citing people familiar with the matter.

Contract-based chip prices are likely to rise around 15% to 20%, depending upon the level of sophistication, with chips produced on legacy nodes likely to face bigger hikes, Bloomberg said, adding Samsung had completed negotiations with some clients while still in discussions with others.

Samsung Electronics declined to comment.

The logo of Samsung Electronics is seen at its office building in Seoul, South Korea, March 23, 2018. REUTERS/Kim Hong-Ji

The company is the world's second-largest chip contract manufacturer, after Taiwan Semiconductor Manufacturing Co (TSMC).

TSMC has forecast an up to 37% jump in current-quarter sales, saying it expects chip capacity to remain very tight this year amid a global chip crunch that has kept order books full and allowed chipmakers to charge premium prices. 

Samsung said in an earnings call in late April that major customers' demand for its chip contract manufacturing was greater than its available capacity, and it expected the supply shortage to continue.