is the world’s largest chip maker, and its products are found in everything from phones to game consoles and computers. But devices using TSMC chips could be more expensive if manufacturers choose to buy chips made by the company outside of Taiwan.
“If a customer requires to be in a certain geographic area, the customer has to share the added cost,” TSMC CEO CC Wei said on the earnings call. “In today’s fragmented globalization environment, costs will be higher for everyone, including TSMC, our customers and our competitors.”
Negotiations with customers regarding the price increase have already started. Whom For TSMC, it costs more to manufacture chips outside of Taiwan (where more than 90 percent of the planet’s most advanced semiconductors are made). But the company will pay those costs as companies and governments push to increase chip supply outside of Taiwan, which China is trying to control.
TSMC has factories in Japan and is building several plants in Arizona, the first of which began operations this month and is expected to be in full production this year. It is also building a factory in Germany.
In addition, the US government last week agreed to provide the company under the CHIPS Act, which seeks to boost semiconductor manufacturing in the country. In return, TSMC pledged to increase its US investment by $25 billion to $65 billion. Accordingly, the company announced plans to build a third US plant by the end of the decade and start producing more advanced 2nm chips by 2028.
Meanwhile, TSMC expects manufacturing costs to rise in Taiwan. Because electricity prices are rising there. The earthquake earlier this month is also expected to hurt profitability as the company struggles to make its cutting-edge 3-nanometer chips more efficient.
Apple, NVIDIA, AMD and Qualcomm are among TSMC’s more prominent customers. So if they buy chips from the company’s US, Japanese or German fabs, their manufacturing costs may increase. It’s a wild guess who will have to eat the cost of these increased costs so that device makers can maintain their profit margins.
