Semiconductor component price hikes may dampen demand

Yet another story about higher prices. DigiTimes reports pricing pressure is mounting as a combination of tight capacity and strong demand is driving up the price of various semiconductor components. Manufacturing costs as well as the price of raw materials are increasing. The website says manufacturers are trying to pass the higher costs onto clients, which could dampen product demand in the first half of this year.

Suppliers in almost all sectors in the semiconductor ecosystem are raising prices to reflect tight capacity amid strong demand. But there have been concerns that the upward pricing trend may send end-device prices up, deterring consumers. For chip vendors, such as driver IC specialist Novatek, price hikes are expected to drive up their revenus and profits in first-quarter 2021. But for China-based foundry house SMIC, which is on a US export blacklist, pricing may be a lesser concern than availability. SMIC may run out of chemical raw materials needed for chip fabrication.