STMicroelectronics issued another price increase letter: all products will be increased in Q2 this year

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

STMicroelectronics said in a letter to its distribution partners that unfavorable economic and geographical conditions have led to increasing raw material costs, energy costs and logistics costs, so the company can no longer absorb its total expenditure and has no choice but to raise prices.

▲STMicroelectronics price increase letter

According to DIGITIMES Asia, sources said that in the fourth quarter of 2021, the operational process visibility of STMicroelectronics orders to customers has been extended to 18 months, and STMicroelectronics has also increased chip prices. The previous price increase of STMicroelectronics chips has caused chip manufacturers, including Taiwan chip manufacturers, to transfer their increased costs to the recipients of the finished products.

Currently, sources said that European Infineon, NXP and Japanese IDM manufacturers will follow STMicroelectronics and raise chip prices. The source added that Renesas Electronics, the world's leading automotive chip manufacturer, just raised chip prices in January this year and is now considering further price increases. This reflects the current phenomenon of rising chip costs and tight supply of automotive chips in the industry.

People familiar with the matter revealed that US analog chip giant Texas Instruments (TI) may become one of the first IDM manufacturers to raise chip prices in the second quarter of 2022.

In addition, TSMC, the world's leading foundry, plans to raise prices for its 8-inch foundry services by 10%-20% starting in the third quarter of 2022, according to relevant news reports cited by DIGITIMES Asia. It is estimated that TSMC accounts for 60%-70% of the total manufacturing orders issued by automotive IC IDM manufacturers.

Relevant sources said that since the beginning of this year, demand in the chip market has been disappointing, chip production costs are high, and Taiwan's chip design companies are unlikely to quickly raise chip prices.

The source also said that Taiwan's chip design companies raised their chip prices in the past two years, but they had no bargaining chips when negotiating prices with customers this year. Many Taiwan's chip design companies will face downward pressure on gross profit margins and profits in 2022.