Automobile, PC, and Phone Prices to Get High due to Rising Material Costs

Seoul, South Korea, on June 14, 2022:

Amid Global market uncertainties, the price of semiconductors has continued to increase. Concerns are rising that it may lead to hikes in the prices of all the industries.

While raw material prices have continued to rise due to the global supply chain crises and the Russia-Ukraine war, imported raw material prices have also increased in the won-dollar exchange rates. Due to rising raw material costs, semiconductor manufacturers are raising the rates.

According to the industry sources, Sumco, which produces wafers, a semiconductor core material price, will get increased by about 30 percent.

In addition, Showa Denko, a chip material producer, raised the price of high-purity gas needed for circuit manufacturing and cleaning by 20%. In Particular, prices of neon, a core chip material, have escalated dozens of times as the world’s largest neon producer Ukraine has been disrupted. As demand for Integrate Circuit (IC) packaging materials continues to increase, supply and demand have also been disrupted. Sumitomo Bakelite, a chip packaging materials manufacturer, and Shinetsu Chemical, a wafer container manufacturer, also raised prices by 20%. As the dollar-won exchange rate has increased, the material costs have continued to grow.

Semiconductor production is also disturbed. The lead time of the critical equipment has currently been extended from a few months in the past to 2-3 years. The equipment supply is allegedly tricky even if it is paid more money.

Due to the rising semiconductor material costs, the chip makers are considering increasing the price. In particular, Taiwan’s TSMC, the world’s No. 1 chip foundry company, raised the contract last year’s prices and planned to increase it further this year. According to the foreign media, Samsung Electronics is also expected to increase the price by 15-20% for each product in the second half of this year. The world’s third-largest chip foundry, UMC, is considering raising production prices by 6% due to higher demands. Global Foundry, the fourth-largest U.S. foundry firm, will increase its unit price by 10% this year.

Semiconductor price hikes can increase manufacturing costs in the overall industries such as PCs, automobiles, and smartphones.

US Treasury Secretary Janet Yellen said, “The U.S. inflation is at an unacceptable level currently. about a third were caused because of the chip storage.” Due to the storage of chips, the prices continued to increase as the production bottleneck has occurred in a wide range of fields, from automobiles to laptops. According to a released report by the Federal Reserve Bank of St. Louis, industries using chips for production have been more hit by the price hikes. Adding more to this, the Korean Public Service and Transport worker’s Union has continued to strike for four straight days, and the supply of the chip materials is expected to be further disrupted.