Renowned analyst Ming-Chi Kuo has forecasted a potential pricing standoff in the semiconductor industry.
What Happened: On Thursday, Kuo an analyst at TF Securities took to X, formerly Twitter, and said that market rumors indicate ASML Holding ASML could hike equipment prices for Taiwan Semiconductor Manufacturing Company Co. Ltd. TSM.
However, Kuo anticipates that TSMC, the world’s largest contract chipmaker, and ASML’s biggest customer, will likely push back against these price increases.
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市場傳言ASML要對台積電漲價設備價格，但我的理解是台積電反而會對ASML砍價。
Market rumors suggest that ASML plans to raise equipment prices for TSMC. However, my understanding is that TSMC is likely to push for price reductions from ASML.
— 郭明錤 (Ming-Chi Kuo) (@mingchikuo) October 18, 2024
ASML is the sole manufacturer of high-end extreme ultraviolet lithography systems, which are essential for creating advanced chips.
TSMC relies on ASML’s EUV technology to manufacture cutting-edge semiconductors for various clients, including tech behemoths like Apple and Nvidia.
Kuo’s comments suggest that TSMC’s likely push for price reductions from ASML could lead to a pricing standoff between the two companies.
Why It Matters: This development comes after TSMC reported strong third-quarter results, beating estimates due to robust demand for advanced processor node technologies used in AI applications.
The company, which supplies chips to global corporations including Nvidia Corporation NVDA and Apple Inc. AAPL, guided fourth-quarter revenue sharply above the consensus.
Meanwhile, ASML reported third-quarter net sales of 7.5 billion euros ($8.16 billion), surpassing analyst expectations of 7.12 billion euros. However, the Dutch firm revised the upper limit of its full-year sales forecast,
Earlier in the year, TSMC had expressed concerns about the high costs of ASML’s new advanced chip machines.
At a technology symposium, TSMC senior vice president Kevin Zhang commented on the high price of the high-NA extreme ultraviolet system, which costs $380 million each.
Photo by Sundry Photography on Shutterstock
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