Why Are Chips Prices Rising Collectively? Understanding the Core Logic Behind It

Recently, the global chip market has experienced a new wave of price increases, from upstream wafer foundries to mid- and downstream packaging and testing, and further to end-user consumer electronics, automotive, and AI devices. Cost pressures are cascading through the supply chain, attracting widespread industry attention. This is not caused by a single factor but results from the combined effects of supply and demand dynamics, industry chain costs, and market structure.

On the demand side, the explosion of AI computing power, the widespread adoption of electric and intelligent vehicles, the recovery of consumer electronics, and upgrades in industrial control continuously drive chip demand upward. Especially the rapid growth in demand for high-end computing chips and automotive-grade chips, with concentrated order releases, directly intensifies the supply shortage in the market.

On the supply side, multiple constraints exist. Chip manufacturing has high barriers to entry, requires significant investment, and has long expansion cycles. The capacity expansion speed of wafer fabs cannot keep pace with demand growth. Meanwhile, costs for upstream raw materials, photoresists, specialty gases, energy, electricity, and logistics are continuously rising, significantly increasing chip production and operational costs. Manufacturers can only pass these costs through price adjustments to transfer the pressure.

Additionally, regional adjustments in the global industry chain, high concentration of key supply links, and low market inventories mean that any order concentration or slight fluctuations in the supply chain can easily trigger market sentiment tension, further pushing up chip prices.

With multiple factors stacking up, the rise in chip prices has become a phased industry trend and will continue to impact subsequent electronic product pricing, manufacturing costs, and the development of the tech industry.