Samsung has announced its intention to adjust wafer prices to fund the expansion of its S5 plant located near Pyeongtaek City, Gyeonggi Province, South Korea.
Like many others in the sector, Samsung Foundry’s manufacturing arm has recently struggled to meet the high demand for its products. Therefore, investing in a modern manufacturing facility will help the company increase its chip production through advanced equipment. But, on the other hand, it will inevitably drive up prices for GPUs, mobile processors, and controllers manufactured by Samsung Foundry.
“[Samsung Foundry] will accelerate growth by increasing S5 line capacity near Pyeongtaek and adjusting prices to accommodate future investment cycles,” said Ben Suh, Samsung’s senior vice president of Investor Relations, during conversations with analysts and investors about the company’s earnings.
Samsung Foundry S5 is the Korean giant’s most advanced manufacturing facility dedicated to 5LPP (5nm) and 4LPE (4nm) wafers and thinner solutions. Since EUV lithography (ultra-hard ultraviolet radiation, wavelength 13.5 nm) is actively used here, the expansion of production will require additional EUV scanners at $ 120-150 million – they are significantly more expensive than DUV scanners (deep ultraviolet radiation, wavelength 193 nm). As a result, Samsung’s growing capital expenditures will be covered by the end-user, albeit indirectly.
In particular, this enterprise produces Exynos mobile processors used in smartphones under the Samsung brand and some other manufacturers. Beyond that, millions of Ampere GPUs for NVIDIA and tens of millions of mobile chips for various brands. Unfortunately, due to its contractual obligations, Samsung Foundry is unable to increase production quotas. Still, it has the power to adjust prices quickly, which will lead to a further increase in the cost of video cards.
Samsung is the only manufacturer to have confirmed the upcoming price hike for semiconductor wafers for its consumers. TSMC, at the beginning of this year, canceled discounts for large customers and preferred stability to short-term benefits, as its representatives put it. Some publications reported that UMC raised the prices, but there was no official confirmation of this information.
