TSMC, the world’s largest semiconductor foundry, is expanding its production capacity globally, which will lead to higher chip manufacturing costs. CEO C.C. Wei acknowledged that producing microchips outside of Taiwan, including in the US and Germany, will entail significant additional expenses. These costs will be passed on to customers, with TSMC already engaging in discussions about premium pricing for chips manufactured in specific regions. The move is driven by factors such as inflation, energy costs, and other operational challenges associated with establishing chip fabrication facilities overseas.
TSMC’s senior vice president, Wendell Huang, emphasized the company’s commitment to maintaining a 53% gross margin, despite the global expansion. To support its overseas ventures, TSMC plans to collaborate with governments for financial assistance and subsidies. The company also banks on its technological leadership and unmatched manufacturing capabilities to mitigate additional expenses.
The exact increase in costs for overseas chip manufacturing remains unclear, but estimates suggest that chips produced at TSMC’s new Arizona facility could be 20-30% more expensive than those manufactured in Taiwan. TSMC’s global expansion is expected to impact the entire chip industry, leading to potential cost increases for customers, competitors, and the wider market. TSMC’s efforts to mitigate these costs through targeted pricing and government support will be closely watched as the company navigates this new phase of growth.
