is the world's largest chip maker, and its products are used in everything from phones to game consoles to computers. But devices using TSMC chips could be more expensive if manufacturers choose to buy devices made outside of Taiwan, where the company is based.
„If a customer wants to stay in a certain geographic area, the customer will have to bear the incremental cost,“ CC Wei, CEO of TSMC, said in an earnings call. „Today's fragmented globalization environment will result in higher costs for all companies, including TSMC, our customers and our competitors.“
Negotiations with customers over price increases have already begun.as It points out that it is more expensive for TSMC to make chips outside of Taiwan (where more than 90 percent of the most advanced semiconductors on the planet are made). But the company will pass those costs on as companies and governments push to increase supply of chips outside of Taiwan, which China seeks to control.
TSMC has a factory in Japan and is building several factories in Arizona, with the first factory scheduled to begin operations this month and begin full-scale production this year. We are also building a factory in Germany.
Additionally, the U.S. government last week agreed to provide the company with: It is based on the CHIPS Act, which aims to strengthen domestic semiconductor manufacturing. In return, TSMC has pledged to increase its U.S. investments by $25 billion to $65 billion. In line with this, the company announced plans to build a third factory in the United States by the end of 2010 and begin manufacturing more advanced 2nm chips by 2028.
Meanwhile, TSMC expects manufacturing costs in Taiwan to increase. This is because electricity prices are rising. The earthquake earlier this month is also expected to have a negative impact on the company's profitability, as is its struggle to make manufacturing its cutting-edge 3nm chips more efficient.
Apple, NVIDIA, AMD, and Qualcomm are among TSMC's more notable customers. That could increase manufacturing costs if they end up buying chips from the company's U.S., Japanese or German factories. Take a wild guess as to who will ultimately have to bear the cost of these increased expenses in order for device manufacturers to maintain profit margins.