TSMC: That’s how much more expensive chips from non-Taiwan factories are getting

After all the joy of being able to get TSMC to set up plants in the USA, there is likely to be a bit of a hangover soon. Because the chips coming from there will only be available at significantly higher prices.

Both the USA and Europe want to learn from the problems with global trade routes and improve their independence from semiconductor imports from the Far East. In order for this to work, even the largest producers had to be wooed to set up their own plants in the respective regions. TSMC has also been working on this for some time, but now it’s also time for price negotiations.

And here, surcharges for semiconductor products are sometimes hefty, as reported in a report by the industry journal DigiTimes emerges. The chips produced in the new plant in the USA and not imported from Taiwan will cost up to 30 percent more. Because the construction of the US factory requires far higher investments and the operating and production costs are also higher than the level of the TSMC home country.

All negotiable

Prices for TSMC’s N4 and N5 process technologies will be 20 to 30 percent higher in the US than their Taiwanese counterparts, while chips manufactured at Japan’s Kumamoto factory will be on N28/N22 and N16/N12 nodes , will be 10 to 15 percent more expensive. However, these figures are also based on a gross margin target of 53 percent, which the TSMC management is working with. It’s likely that larger customers in particular will be able to negotiate lower mark-ups – especially for products where it might also be possible to go to competitors like Samsung.

This is especially true for buyers like AMD and Qualcomm, which are technologically closer to Samsung. Nvidia, on the other hand, is more likely to speculate on the expansion of the Intel foundries in order to get leverage. The ever-increasing complexity of the designs ensures that you cannot switch to other producers at will.

Apple is a bit out of line here. The group pays significantly less than other TSMC customers anyway. On the one hand, this has to do with the fact that Apple contributes a significant share of up to 25 percent to the total turnover of the contract manufacturer. In addition, the Californian company is also involved in the development and financing of process technologies and thus differs from many other customers.

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