By Stephen Nellis
– Marvell Technology Inc customers have broadly been willing to accept price increases in exchange for steady chip supply, the company’s chief executive said on Thursday as it reported better-than-expected quarterly sales.
“It really is a discussion and engagement with each of your customers,” CEO Matt Murphy told Reuters in an interview. “Ultimately, what they care about is capacity? ‘Can you supply me? If you can’t get me the parts, why would I agree to a price increase?’”
Marvell, which makes networking chips used in data centers and vehicles, raised its third quarter sales forecast after reporting stronger-than-anticipated second quarter sales.
The company expects third quarter sales and adjusted profits of $1.145 billion and 38 cents per share, versus Wall Street estimates of $1.13 billion and 37 cents per share, according to data from FactSet.
Marvell designs chips but relies on others to make them, and those factories are experiencing global shortages stemming from a boom in demand from a wide range of industries.
Marvell said while demand had exceeded supply, it generally has been able to pass many price increases on to its customers, leaving its own margins intact.
The results came a day after the Wall Street Journal, citing sources, reported that Taiwan Semiconductor Manufacturing Co Ltd, the world’s biggest contract manufacturer of chips and a key supplier to Marvell, would raise chip prices between 10% and 20%.
Murphy said TSMC has not issued any formal communication to Marvell about the reported price increases, but he noted that prices have been increasing across the industry since the end of last year.
“Given the constraints that are out there, I think customers understand that there are these cost increases happening,” he said.