This year, the business plans to start producing large quantities at its first plant in Arizona.
TSMC is the largest chipmaker in the world, and its products may be found in a wide variety of electronic devices, including PCs, game consoles, and mobile phones. Devices that use TSMC chips, on the other hand, can become more expensive if makers decide to purchase chips that the company manufactures in countries other than Taiwan, where it isheadquartered.
The Chief Executive Officer of TSMC, CC Wei, stated on an earnings call that “if a customer requests to be in a certain geographical area, the customer needs to share the incremental cost and pay for it.” As a result of the fragmented globalization environment that exists today, costs will be greater for all parties involved, including TSMC, our customers, and other businesses.
Beginning now, discussions with clients over price increases have already begun. It is more expensive for TSMC to manufacture chips outside of Taiwan, as the Financial Times points out. Taiwan is the location where more than 90 percent of the world’s most advanced semiconductors are manufactured. On the other hand, the company will be passing on those expenses in the midst of a push by other businesses and governments to grow chip supplies outside of Taiwan, which China is striving to control.
This month, the first of TSMC’s plants in Arizona began operations, and it is anticipated that the company will reach full output this year. TSMC already has plants in Japan and is now constructing several more in Arizona. Additionally, it is building a facility in Germany of its own.
In addition, an agreement was reached last week by the government of the United States to provide the corporation with funding in the amount of $6.6 billion under the CHIPS Act, which is intended to strengthen the manufacturing of semiconductors in the country. In exchange, TSMC promised to increase its investment in the United States by $25 billion, bringing the total amount to $65 billion. As a result of this, the company has declared that it intends to construct a third factory in the United States before the end of the decade and to begin manufacturing more advanced 2nm chips by the year 2028.
In the meanwhile, TSMC anticipates that the expenses of its manufacturing operations in Taiwan would rise. Because of the skyrocketing cost of electricity in the region. In addition, it is anticipated that the company’s profitability would suffer as a result of an earthquake that occurred earlier this month. Additionally, the company is having difficulty improving the efficiency of the production process for its most sophisticated 3nm chips.
Customers like as Apple, NVIDIA, AMD, and Qualcomm are among the most notable ones that TSMC serves. Therefore, if they wind up purchasing chips from the company’s fabs in the United States of America, Japan, or Germany, their production costs can increase. You may make an educated guess as to who would wind up being responsible for bearing the cost of those higher expenses in order for gadget manufacturers to keep their profit margins.