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Taiwan Semiconductor Manufacturing Company has set the tone for the next phase of the global chip industry. The world’s largest contract chipmaker has informed its customers about annual price increases for advanced chips, effective January 1, 2026. The plan stretches through 2029. The move signals a clear shift in semiconductor pricing as artificial intelligence reshapes demand.
Reports from Taiwan indicate that TSMC will raise prices by 3% to 10% in 2026. The final increase will depend on the manufacturing process. Advanced chip nodes below 3 nanometers face the strongest pressure. Capacity limits and relentless demand for AI semiconductors continue to strain supply.
The market reacted quickly. TSMC shares jumped to a record NT$1,530 on December 29, 2025. The rally added nearly 160 points to Taiwan’s Taiex index. Foreign investors showed strong confidence. Net purchases reached NT$9.27 billion on the main board. The surge highlighted TSMC’s pricing power in advanced chip nodes.
Capacity constraints sit at the center of the strategy. TSMC Chairman C.C. Wei confirmed that demand for advanced nodes exceeds supply by nearly three times. AI accelerators, high-performance computing, and premium mobile chips keep factories fully booked. Utilization rates at 3nm and 5nm lines remain at full capacity.
Major customers continue to commit despite higher costs. NVIDIA, Apple, AMD, and Broadcom have expanded long-term capacity bookings. TrendForce data shows aggressive demand for AI-focused chips across data centers and cloud platforms.
TSMC’s upcoming 2nm process already attracts flagship designs. Apple plans to use the node for future M-series processors. AMD targets server-grade Epyc Venice chips. Google prepares next-generation TPU processors.
Rising production costs also influence semiconductor pricing. Extreme ultraviolet tools require heavy investment. Energy and labor costs continue to rise in Taiwan and overseas facilities. New fabs in Arizona and Japan add margin pressure. US tariffs on semiconductor imports further increase costs for advanced wafers. Industry estimates place the cost of a 2nm wafer at around $30,000.
TSMC plans to address these factors at its investor conference on January 15, 2026. Analysts expect guidance on pricing and first-quarter performance. The company continues to avoid direct price commentary. Management reiterates that pricing is based on a long-term strategy rather than a short-term opportunity.
The broader industry faces ripple effects. Higher TSMC chip prices will raise costs for smartphones, GPUs, servers, and AI systems. Consumer electronics prices are expected to rise steadily through 2029. Competitors such as Samsung and Intel Foundry Services may also attract interest. Still, TSMC controls over 70% of advanced chip nodes. Alternatives remain limited.
TSMC chip prices now reflect a new era. AI semiconductor demand, advanced chip nodes, and capital intensity redefine semiconductor pricing. The era of cheap transistors is fading.
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