TSMC is the world’s largest chipmaker, and its products are found in a wide range of devices, from phones to game consoles to computers. But soon, devices using TSMC chips may become more expensive if manufacturers decide to buy chips that the company produces outside its base in Taiwan.
«If a customer wants to be in a certain geographic area, the customer has to share the additional costs», — said TSMC CEO Xi Wei. «In today’s fragmented globalization environment, costs will be higher for everyone, including TSMC, our customers and our competitors».
Negotiations with customers on price increases have already begun. According to the Financial Times, it is more expensive for TSMC to produce chips outside of Taiwan (where more than 90% of the most advanced semiconductors are produced). But the company will pass these costs on to customers amid intentions by companies and governments to increase the supply of chips from outside Taiwan, which is threatened by China’s takeover.
TSMC has fabs in Japan and is building several fabs in Arizona, USA. The first of them started operating this month and is expected to start full production this year. The company is also building a fab in Germany.
Last week, the US government agreed to provide TSMC with $6.6 billion in funding under the CHIPS Act, which aims to support semiconductor production in the country. In return, TSMC promised to increase its investment in the US by $25-65 billion and announced plans to build a third US fab by the end of the decade and start producing more advanced 2-nm chips by 2028.
Meanwhile, TSMC expects production costs to rise in Taiwan. This is due to the rapid rise in electricity prices. The earthquake that occurred earlier this month is also expected to have a negative impact on the company’s profitability, as is its struggle to improve the production efficiency of its most advanced 3nm chips.
Apple, NVIDIA, AMD, and Qualcomm are among TSMC’s largest customers. If they buy chips from the company’s fabs in the US, Japan, or Germany, their production costs could rise. However, they will pass these additional costs on to the end consumer by increasing the prices of their own products.
Source: Engadget