Amazon Devices Face Billions in Projected Losses
The company expects a $4.612 billion gross loss as TSMC considers raising costs for advanced chip packaging.
Updated on Oct. 27, 2026 in Semiconductors
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Amazon is forecasting a $4.612 billion gross loss for its devices business this year, significantly missing its original $438 million loss target. The company faces ongoing pressure from rising memory costs as it continues to expand its product line.
Why it matters
Difficult trade-offs between sales volumes, device pricing, and gross profit are straining the profitability of the Amazon devices unit. Simultaneously, rising demand for AI chips is forcing manufacturers to manage significant capacity constraints.
Amazon recently launched the $75 Frontier bracelet and $100 Eclipse device. Meanwhile, TSMC is considering a 10% to 20% price hike for advanced packaging as demand for server CPUs and ASICs climbs.
The players
Amazon
This multinational technology company operates in e-commerce, cloud computing, and digital streaming while managing an extensive hardware division.
TSMC
Headquartered in Taiwan, this firm is the worlds largest dedicated independent semiconductor foundry and a primary manufacturer for major tech companies.
Nvidia
This technology company designs graphics processing units and system-on-a-chip units for the gaming, professional visualization, and data center markets.
AMD
This semiconductor company develops computer processors and related technologies for business and consumer markets.
The details
TSMC is currently struggling with production bottlenecks as AI chip demand shifts from GPUs to other sectors. This supply pressure is projected to drive costs higher for major chipmakers such as Nvidia and AMD.
Timeline
Amazon unveiled the new Bee brand devices on October 15.
TSMC expects monthly CoWoS capacity to exceed 130,000 units in 2026.
TSMC expects monthly CoWoS capacity to exceed 200,000 units in 2027.
The Tech Race
The reliance on CoWoS packaging technology for AI chips has created a bottleneck that forces foundries to weigh price hikes against explosive demand. This development highlights the intensifying competition among tech giants to secure production capacity for critical hardware components.
Rising hardware costs could eventually lead to higher price tags on consumer electronics or reduced availability of entry-level devices. Shoppers should anticipate potential shifts in how companies balance product features with manufacturing expenses.
The takeaway
Companies are currently navigating a volatile landscape where escalating production costs for advanced components directly conflict with consumer price expectations. Efficiency in supply chain management and manufacturing partnerships will be the defining factor for hardware profitability in the coming years.
Further reading
Learn more about the latest developments in the Semiconductors industry.
Source note: This article includes information reported by Firstpost.
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