Home World’s biggest chipmaker TSMC set to increase prices

World’s biggest chipmaker TSMC set to increase prices

Taiwan Semiconductor Manufacturing Company (TSMC) has indicated it will increase the cost of chips made outside of Taiwan as the company reacts to pressures on its profitability.

The world’s largest maker of advanced chips for customers like Apple Inc. and Nvidia Corp., has sounded its price warning as government and big tech firms are cognizant of the geopolitical risks of having more than 90% of the world’s chips made in the country. Moves are already underway to spread the production of the most advanced semiconductors to other locations, especially as China claims Taiwan as part of its sovereign territory and is striving to bring it under full control.

TSMC’s chief executive CC Wei made a clear statement on Thursday, during the company’s earnings call for the first quarter.

“If a customer requests to be in a certain geographical area, the customer needs to share the incremental cost.”

“In today’s fragmented globalization environment, cost will be higher for everyone, including TSMC, our customers and our competitors,” he said, adding that discussions with customers had commenced.

TSMC plans for overseas semiconductor production

Global expansion, intense power consumption, and overall production of in-demand cutting-edge technology come with a significant outlay so this development won’t be a shock to many. As the company deviates from its original policy of only making chips in Taiwan, it is reacting to market forces.

TSMC is now preparing to make its chips in Germany, Japan, and the US with fabs being built to house the production but it will mean paying a premium for the product.

Startup and material costs are simply much more expensive than in TSMC’s native environment and this comes at a time when it expects to see a slump in the domestic market.

The flagship Taiwanese company has forecast for profitability to fall this year due to increased power costs at its main base, the damaging impact of the earthquake earlier in April, and a slower 3nm manufacturing process – the most advanced chip technology currently in mass production.

Image credit: TSMC

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Graeme Hanna
Tech Journalist

Graeme Hanna is a full-time, freelance writer with significant experience in online news as well as content writing. Since January 2021, he has contributed as a football and news writer for several mainstream UK titles including The Glasgow Times, Rangers Review, Manchester Evening News, MyLondon, Give Me Sport, and the Belfast News Letter. Graeme has worked across several briefs including news and feature writing in addition to other significant work experience in professional services. Now a contributing news writer at ReadWrite.com, he is involved with pitching relevant content for publication as well as writing engaging tech news stories.

Get the biggest tech headlines of the day delivered to your inbox

    By signing up, you agree to our Terms and Privacy Policy. Unsubscribe anytime.

    Tech News

    Explore the latest in tech with our Tech News. We cut through the noise for concise, relevant updates, keeping you informed about the rapidly evolving tech landscape with curated content that separates signal from noise.

    In-Depth Tech Stories

    Explore tech impact in In-Depth Stories. Narrative data journalism offers comprehensive analyses, revealing stories behind data. Understand industry trends for a deeper perspective on tech's intricate relationships with society.

    Expert Reviews

    Empower decisions with Expert Reviews, merging industry expertise and insightful analysis. Delve into tech intricacies, get the best deals, and stay ahead with our trustworthy guide to navigating the ever-changing tech market.