Samsung Foundry to charge up to 20% more to build chips using older legacy process nodes

Chip foundries like TSMC have been taking advantage of the heavy demand for chips and the shortage of these components to raise prices. And now, according to Bloomberg, it is Samsung that is joining the club. Samsung Foundry is the second-largest independent foundry in the world after TSMC. Both firms take chip designs made by other companies and build the chips. The two foundries will be the only ones shipping 3nm chips this year.

Depending on how complex a chip design is, Samsung plans on charging its customers 15% to 20% more to produce these components. Interestingly, chips that require older legacy nodes during production will be seeing a larger increase in pricing than those chips made using newer and more cutting-edge process nodes. The price increase would take place during the second half of this year.

While Samsung Foundry kept its pricing steady last year, the world's largest foundry, TSMC, raised its prices by as much as 20% starting last August. However, industry analyst Lu Xingzhi noted in September that TSMC was giving a break for its biggest customer, Apple. Le's report noted that Apple was seeing a small 3% increase in price for the A15 Bionic, the chip designed by Apple and built by TSMC that currently powers the iPhone 13 series and the latest iPhone SE model. The A15 Bionic is built using TSMC's second-generation 5nm process node.

The new report notes that some of Samsung's customers have already agreed to the higher pricing. Masahiro Wakasugi, Bloomberg Intelligence analyst said, "With costs rising on everything from power and equipment to materials and freight, this is an inevitable move for Samsung. Some customers may accept higher prices if they can get chips earlier than others."

Back in February, a report indicated that one of Samsung Foundry's customers, Qualcomm, was very upset with the 35% yield that the foundry was achieving on its 4nm process node. That means of every 100 chips produced by Samsung using the 4nm node, only 35% of them could make it through quality control. That is half of the 70% yield that TSMC has achieved for that node leading U.S. chip designer Qualcomm to reportedly turn over production of the Snapdragon 8 Gen 1+ to TSMC along with the next-generation Snapdragon 8 Gen 2 chipset.

However, there supposedly has been some improvement in Samsung's 4nm yield rate lately. But as far as Qualcomm is concerned,Samsung Foundry's turnaround is too little, too late.