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TSMC is not going to profit from the lack of production capacity, raising prices
eighteen.10.2021 [08:46],
Alexey Razin

Taiwanese media regularly report on the intentions of UMC and a number of other contract manufacturers to raise prices for their services due to a sharp increase in demand for services caused by the pandemic. The largest contract manufacturer in the world, Taiwan’s TSMC, tried to convince the public that it will keep prices unchanged.

Image source: TSMC

The problem of a shortage of production capacity is especially pronounced in the segment of silicon wafers with a standard size of 200 mm. In the period leading up to the pandemic, specialized services market participants cut production lines for processing inserts of this size. It was more profitable for them to switch to a standard size of 300 mm and more progressive technical processes. The pandemic has spurred the demand for laptops, which require power components and other products that are traditionally made from silicon wafers of the size 200 mm. The shortage caused a rise in prices for the corresponding services among a number of TSMC’s competitors.

TSMC itself, as the company’s management explained at a quarterly conference, will not raise prices for processed silicon wafers. The company builds equal and long-term relationships with clients, and the desire to cash in on short-term deficits clearly does not contribute to strengthening the image of the counterparty. TSMC will not go to such measures.

Analysts also asked TSMC representatives if the general nervousness of the situation in the company’s customers was causing the desire to resort to excessive purchases of components, as it was in the first months of the pandemic. When TSMC’s main production lines are already fully loaded, the additional increase in order volumes will only complicate the situation. The management of the company said that it conducts outreach work with customers and organizes supply planning in such a way that no one orders more than is required.

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