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TSMC will freeze prices from next year and spend $ 100 billion over three years on development
TSMC has so far not been featured prominently in the news about the rise in prices for services of contract manufacturers of semiconductor components. The company’s customers have just now received a notification that from December 31 of this year TSMC will abandon the traditional price cut for a year, and in total, up to 2023 inclusive, $ 100 billion will be spent on expanding production and mastering new technologies.
Image source: TSMC
Not so long ago, TSMC’s management publicly spoke about the need to maintain partnerships with customers, implying a predictable and stable pricing policy, but the industry began to seriously fever after a crisis in the automotive segment arose by the beginning of this year. As noted by Nikkei Asian Review, citing a letter from TSMC CEO Ci-Xi Wei (C.C. Wei, in which he speaks to customers, fundamental changes in demand are forcing the company to take drastic measures to increase production of semiconductor products, and this will require additional funds.
Just this year, we recall that TSMC’s capital expenditures should amount to $ 25-28 billion, and in total until 2023, inclusive, the company is ready to allocate at least $ 100 billion for the corresponding needs. In order to adequately respond to the challenges of the time, TSMC is forced to abandon the traditional price reduction for silicon wafers with finished products for four quarters from December 31 of this year. Previously, she revised prices downward every quarter, as production increased, costs decreased and scrap rates decreased. According to TSMC management, this step is the lesser of evils for customers, and it will allow the company to ensure stable operations in the coming years.
Part of the funds allocated for capital construction $ 100 billion in the next three years will be used to expand existing enterprises, as well as to build new ones, including and using electricity from renewable sources. The bulk of TSMC’s operations are based in Taiwan, with a couple of factories in China and a subsidiary in the United States that produces small-scale customized products for local customers using mature lithographic technology. Along the way, a more modern and productive enterprise worth $ 12 billion is being built in the state of Arizona, which in a few years will be able to offer 5-nm products to customers.
According to the head of TSMC, over the past 12 months, TSMC enterprises have been working with one hundred percent workload, and at the same time they still did not allow satisfying the existing demand. Xi-Xi Wei urged customers to be patient as the company endeavors to address the shortage of semiconductor components. TSMC representatives confirmed the company’s readiness to invest $ 100 billion in the next three years to expand production capacity and master new lithographic technologies.