The second largest chipmaker in Europe, STM (STMicroelectronics) has announced that it would be raising the prices of its products across the line starting from 1st June 2021. This announcement was shared earlier this week, as the firm claims that it is facing issues with the procurement of materials.
Reportedly, the price hike arrives as the cost of materials has also risen along with the surge in demand amid the growing global shortage of semiconductors. STM added that “Semiconductor demand is currently reaching unprecedented heights, leading to major challenges in meeting orders despite our significant capital investment.” The chipmaking giant also shared a statement that was cosigned by Collins Wu, the regional vice president for the Asia Pacific region.
For those unaware, the firm is based in Switzerland and specializes in making power discrete devices and microcontrollers units (MCU) for automotive applications. But now, the company is struggling to secure materials suppliers, as the suppliers themselves are struggling to meet customer demand due to the semiconductor shortage. This has led to “cost increases and more aggressive commercial terms to maintain our supply of these scarce materials.”
Furthermore, the hike in price is supposedly not a short term surge as it is expected to be sustained for at least another year or two. This situation is also further worsened by the already stretched 6 to 12 month long lead times that are required for capacity expansion at foundries like TSMC, the world’s largest contract chipmaker.
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