TSMC will increase prices for chips manufactured outside of Taiwan ─ this will likely drive up the cost of end devices

TSMC is the world's largest chip manufacturer, and its products are found in a wide range of devices, from phones to gaming consoles and computers. However, devices using TSMC chips may soon become more expensive if manufacturers decide to buy those chips that the company produces outside of its base in Taiwan.

“If a customer wants to be in a certain geographic area, the customer has to bear additional costs,” said TSMC CEO C.C. 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 microchips outside Taiwan (where more than 90% of the most advanced semiconductors are produced). But TSMC will pass these costs on to customers amid the intentions of companies and governments to increase supplies of microchips from outside Taiwan, which faces a threat of takeover by China.

TSMC has plants in Japan and is building several plants in Arizona, USA. The first of them started operating this month and is expected to begin full production this year. The company is also building a plant in Germany.

Last week, the US government agreed to provide TSMC with $6.6 billion in funding under the CHIPS law, which aims to support semiconductor production in the country. In exchange, TSMC promised to increase its investments in the US by $25-65 billion and announced plans to build a third plant in the US by the end of the decade and start production of more advanced 2nm chips by 2028.

Meanwhile, TSMC expects production costs in Taiwan to rise. This is due to the rapid increase in electricity prices. It is expected that the earthquake that occurred earlier this month will also have a negative impact on the company's profitability, as well as its efforts to increase the efficiency of production of its most advanced 3nm chips.

Apple, NVIDIA, AMD, and Qualcomm are among the largest customers of TSMC. If they purchase chips at the company's factories in the US, Japan, or Germany, their production costs may increase. However, they will pass on these additional costs to the end consumer, increasing the prices of their own products.

Source: Engadget