Basic Semiconductor raises prices up to 25% as AI chip demand tightens supply

Basic Semiconductor's price hike of up to 25% shows chip supply remains constrained by surging AI and electric vehicle demand.

Basic Semiconductor, the HKEx-listed chipmaker, will raise prices on select products by as much as 25% starting in the third quarter, citing sustained demand from AI and electric vehicle markets that has kept supply tight.

"The rapid expansion of AI training and inference workloads, combined with the electrification of transportation, has created demand that outpaces our current production capacity," the company said in a Hong Kong stock exchange filing on July 13.

The price adjustment, which applies to an unspecified range of products, will vary by product category, order size, and market region. Basic Semiconductor said the increase supports continued research and development spending while ensuring supply stability for customers.

The move comes as the global semiconductor industry faces a structural supply crunch. Memory makers Samsung and SK hynix are jointly investing 800 trillion won ($518 billion) to build four new fabrication plants in South Korea, while Micron is spending $3 billion to strengthen US supply chain capacity — though meaningful new capacity is unlikely before 2028, CEO Sanjay Mehrotra has warned.

The pricing power on display at Basic Semiconductor reflects a broader imbalance across the chip supply chain. Micron is currently meeting only 50% to 66% of core customer demand, Mehrotra said, and DRAM and NAND manufacturers report being sold out at least into 2027. Prices for memory chips have risen sharply as AI data center buildouts and consumer applications compete for limited supply.

The third-generation semiconductor materials market — silicon carbide (SiC) and gallium nitride (GaN) substrates used in power electronics — is valued at approximately $8.5 billion in 2026 and forecast to grow at a 22.5% compound annual rate to more than $58 billion by 2035, according to IndexBox. SiC penetration in EV main inverters stands at 25% to 30% this year and is expected to exceed 70% by 2035 as 800-volt battery architectures become standard.

Supply Chain Constraints Run Deep

The bottlenecks extend beyond finished chips to raw materials and packaging. Global capacity for high-quality SiC substrates is estimated at 2.5 million to 3.5 million six-inch equivalents per year, with long-term supply agreements covering 60% to 70% of output. Crystal defect densities in SiC substrates force 15% to 25% material overage in procurement, adding cost pressure throughout the chain.

On the memory side, Sandisk and Kioxia recently announced production of their 10th-generation 3D flash memory (BiCS10) at a facility in Kitakami, Japan. The 332-layer TLC NAND achieves a bit density greater than 29 gigabits per square millimeter — a 59% improvement over the prior generation — with interface speeds of 4.8 gigabits per second. The partnership between the two companies has been extended through 2034.

Investment Implications

For investors, Basic Semiconductor's price increase shows that pricing power remains intact across the semiconductor value chain. Companies with captive production capacity or long-term supply agreements — including Samsung, SK hynix, and Micron — are best positioned to capture the premium. Smaller fabless chipmakers without guaranteed wafer allocation may face margin compression as they absorb higher input costs.

The key question is whether the industry can bring enough new capacity online before demand growth moderates. SK hynix's US advanced packaging facility in West Lafayette, Indiana, is scheduled for mass production in late 2028 — a timeline that highlights the multiyear lag between investment and output. Until then, supply constraints will continue to support pricing discipline across the sector.

This article is for informational purposes only and does not constitute investment advice.