Semiconductor Chip Shortage Will Increase Prices of Electronics in 2021

The ongoing global pandemic was brutal on many industries but the semiconductor industry was a bright spot. The industry has seen a massive spike in demand which, in return, has increased the pressure on a supply chain that was already running as fast as it could. Hence, the prices of semiconductors are expected to rise due to shortages in production capacity in comparison to their demand.

Some foundries have already notified their consumers about the price hikes while others are in the process of doing it. According to a recent report by a South Korean publication The Elec, the world’s largest contract chipmaker TSMC has reversed its price cut policy for its major customers, due to the higher demands. Other foundry-based firms like GlobalFounderies that are working on 100 percent capacity are also following the same plan.

Furthermore, Taiwanese chipmakers including UMC and VIS, have also increased chip production prices. The chipset prices for DB HiTek from South Korea have increased as much as 20 percent despite their fabs running at 100 percent capacity. DB Hitek, which makes chips for Apple tablets, said supplies are expected to be tight until the second half of next year.

All in all, the sudden rise in chipset demand and the shortage of supply are expected to cause a rise in memory and semiconductor systems prices. Most of the semiconductor makers are fully booked for at least six months.

Moreover, fixed prices of DRAMs are also expected to rise by around 5 percent in the first quarter of 2021.

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