TSMC Chief Blames Low-End Chips For Hindering Supply Chain; Sees Higher Prices For High-End Chips

TSMC Chief Blames Low-End Chips For Hindering Supply Chain; Sees Higher Prices For High-End Chips
  • Taiwan Semiconductor Manufacturing Company Ltd TSM CEO C.C. Wei warned that an endemic chip crisis costing anywhere from $0.50 to $10 is slowing down the $600 billion semiconductor industry, Bloomberg reports.
  • The ongoing crisis of such low-end chips hindered production in critical segments of the supply chain, he said.
  • ASML Holding N.V. ASML struggled to procure $10 chips for its extreme ultraviolet lithography systems.
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  • He expressed TSMC's inability to meet the demand for low-end chips at legacy factories.
  • TSMC acknowledged building new plants suggesting higher prices for mature chips in the months ahead. The new plants included a new 28-nm factory in China. 
  • He attributed the crisis to the automakers adding more features to cars and additional smartphone features.
  • The production costs also increased due to more countries racing to build domestic fabs.
  • While demand is generally dwindling, logistics jams and chronic component crises continue to plague some industry players like Applied Materials, Inc AMAT and Nvidia Corp NVDA.
  • Taiwan Integrated Circuit design houses already looked to renegotiate with TSMC on foundry prices for 2023.
  • Given the slowing demand for products like smartphones and PCs, clients found it difficult to cope with TSMC's price hike.
  • Analysts saw products using more advanced chips like GPUs (graphics processing units) and high-end CPUs (central processing units) going up in price, unlike smartphones which saw lower demand.
  • Price Action: TSM shares closed lower by 2.23% at $82.85 on Monday.
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