Is TSMC likely to be affected? ASML's "one-size-fits-all" price increase of 10% for Korean exposure machine equipment is rare

ASML, the world's largest semiconductor equipment manufacturer, will increase the repair prices of equipment parts supplied to South Korea's Samsung and SK Hynix by 10%. All components used in extreme ultraviolet (EUV) and deep ultraviolet (DUV) exposure machine equipment are affected by this. The price increase will take effect from January next year. Whether this move will affect Taiwan's TSMC, which also uses ASML exposure machines, has attracted attention.

According to industry insiders on the 10th, ASML headquarters sent the price increase proposal to Samsung and SK through its Korean subsidiary early last month. The price increase was finalized in consultation with the purchasing departments of both companies. It is understood that ASML has previously individually adjusted the price of specific parts due to significant increases in raw material costs or difficulties in procuring certain raw materials. This "blanket" price increase of 10% is really rare.

A semiconductor industry official said: Although the prices of all components have increased, ASML is also looking for larger profit margins to match the profits of its customers.

Previously, "The Information" reported in July that ASML had notified Chinese semiconductor companies and other customers that it would increase the price of DUV equipment by 10%, and some customers have accepted this adjustment. But on the other hand, it is reported that ASML's largest customer in Taiwan, TSMC, is opposed to this price increase.

Prices are rising for all products, from consumable parts purchased on a daily basis to major parts replaced due to failure or performance degradation. Exposure equipment contains numerous parts, including optical components such as lenses and mirrors, light sources, and precision actuators. As a result, the ongoing operating costs of the equipment also increase.

ASML separately counts service, parts and upgrade revenue from equipment installed on customer sites. Last year, this revenue reached 8.193 billion euros, accounting for 25% of the total revenue of 32.667 billion euros. ASML expects this revenue to grow by more than 30% this year.

Following the increase in parts prices, the price of newly ordered ASML equipment is also very likely to increase. ASML is currently discussing equipment price increases with major customers.

Industry insiders believe that since Samsung Electronics and SK Hynix have accepted comprehensive price increases from the world's largest equipment manufacturers, this will increase the intensity of other equipment and parts suppliers' demands for price increases.

Real price increases have already begun. U.S.-based Applied Materials announced price increases for both its new and existing products during its earnings call last August. Tokyo Electronics Corporation of Japan also explained at its financial report meeting in late July that in order to cope with rising costs, the company is adjusting prices, including adjustments to the prices of equipment currently on sale. American plasma power supply manufacturer Advanced Energy also announced that it has increased the prices of some product lines.

The spread of price increases is driven by a supply-demand imbalance, with orders for equipment and components surging as memory and foundry companies expand capacity due to investments in artificial intelligence (AI) data centers.

However, suppliers need time to increase production through factory expansion. In addition, inflation and rising raw material costs have also increased the cost burden on suppliers. Unlike in the past when semiconductor companies used their purchasing power to demand price cuts, today suppliers have greater bargaining power when it comes to pricing.

An industry insider said: As large-scale expansion actually proceeds, equipment and parts have entered a stage of supply shortage. If wafer input increases, there will also be massive supply shortages of materials used in the production process.