TSMC's average selling prices (ASPs) for its wafers have increased 15.9% annually from 2019 to 2025. Additionally, gross profit margins per wafer rose rapidly to 3.3x throughout 2025, according to SemiAnalysis. This increased margin reflects TSMC fully leveraging its market-leading position and broad ecosystem to command higher product pricing, which in turn drives downstream effects, including higher end-product pricing. The increases come after a decade during which TSMC earned minimal profit, keeping pricing low as it cornered the market and expanded its market share.
The new era of extreme ultraviolet (EUV) chipmaking began in 2019, with TSMC positioned as the top contract chipmaker. Equipped with robust production capacity and an ecosystem of partners leveraging this new technology, TSMC has seen significant ASP growth. The company is expected to maintain this momentum into 2026 and beyond, driven by several factors.
For 15 years, TSMC's wafer ASP stayed flat. From 2005 to 2019, ASP rose just $32 per wafer. 0.1% CAGR before breaking the trend. Since 2019, ASP is up 133% in 6 years at 15.2% CAGR. COGS rose only 78%. Gross profit per wafer expanded 3.3x.The regression tells the same story.… pic.twitter.com/h1cb1w1Tg0December 22, 2025
The rise of TSMC
Since its inception in 1987, through to the 2010s, TSMC was considered a leading foundry, but not a leading chipmaker. At the time, Intel was the undisputed champion of the semiconductor industry, with microelectronics pioneers like IBM also remaining competitive. However, TSMC has been consistently expanding its ecosystem over the years. In 2008, the company established its Open Innovation Platform (OIP) program — uniting TSMC with chip designers, IP providers, and EDA tool developers — essentially setting the stage for its current success.
Things changed suddenly for TSMC in the mid-2010s, when Apple outsourced production of its chips to TSMC, departing from Samsung, which had since become a significant rival to Apple in the smartphone segment. For Apple, going with TSMC guaranteed no IP theft and no plans to compete in the smartphone segment. TSMC also offered a continually evolving roadmap of process technologies and capacity availability, which, among other things, persuaded Apple to back TSMC.
Landing orders from the world's largest manufacturers of consumer electronics (including Huawei, Sony, and Panasonic) gave TSMC the financial capacity required to invest in R&D and new tools to produce chips for customers at high volumes. With Intel's hiccups with its 10nm fabrication process, TSMC entered 2019 with all of the factors needed to become a market leader.
The company was offering services that no other chipmaker could match, bagging big-name customers like Apple, Huawei, and Nvidia in the process. This offered TSMC not only informal recognition of leadership but also the financial resources to expand its turf.
As a result, after more than a decade of stagnation, TSMC's wafer pricing model fundamentally changed in 2019, as it had to buy, deploy, and depreciate ASML's Twinscan NXE tools, which cost around $235 million each. While these tools from ASML were less expensive in 2019, they steadily increased in price, as the machines became more advanced.
Since TSMC had no real competition, and an increase in the costs of machinery, these factors set the stage for market dominance. Paired with the massive OIP infrastructure, TSMC managed to expand gross profit per wafer by roughly 3.3x throughout 2025, based on data from SemiAnalysis. The report claims that quotes are rising at a far faster pace than production costs, which sets a new economic baseline for leading-edge foundry manufacturing.
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