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TSMC, other Taiwan chipmakers considering price hike for automotive chips

Companies mulling price increases of up to 15% amid global semiconductor shortage

TSMC Tainan office building (Reuters photo)

TSMC Tainan office building (Reuters photo)

TAIPEI (Taiwan News) — Amid a global shortage, Taiwan Semiconductor Manufacturing Company (TSMC) and other Taiwanese chipmakers are considering increasing prices for automotive chips.

Price increases of up to 15 percent are being mulled by TSMC automotive chip subsidiary Vanguard International Semiconductor among other chipmakers in the country, including United Microelectronics Corp. (UMC), Nikkei Asia reported. Hikes are expected between late February and March.

Foundries in Taiwan have contacted their automotive chip customers, including the Netherlands’ NXP Semiconductors and Japan’s Renesas Electronics. NXP, Renesas, and others in the industry have already increased their prices for carmakers, meaning that further increases could eat into automakers’ profits.

Carmakers are now having to scale back production due to the global chip shortage in addition to higher manufacturing costs. The lack of chips was partially caused by Washington’s trade sanctions on Chinese companies like Huawei and Semiconductor Manufacturing International Corp. (SMIC) and then exacerbated by a spike in demand from automakers.

Last July, the Trump administration’s tightened sanctions on Huawei caused the Chinese company to place huge orders with TSMC and other Taiwanese foundries in order to stockpile chips before updated U.S. trade restrictions went into effect in September. Then, in mid-September, news that SMIC would also be hit with American sanctions caused Qualcomm — an SMIC customer — to reach out to TSMC, UMC, and other Taiwanese chipmakers to procure chips.

In October, spurred by strong car sales in China, automakers ramped up production. However chipmakers like Germany’s Infineon Technologies were not able to meet the sudden spike in demand, so they outsourced production to companies like TSMC and UMC. Taiwanese foundries were already operating at full capacity, and since cars usually require less advanced chips, automotive chips were not prioritized, which further amplified the shortage.

Prices along the semiconductor supply chain will likely increase as the shortage crunch extends to other products, such as home electronics. According to the report, ASE Technology Holding, a Taiwanese semiconductor packaging firm, is also considering a price hike of around 10 percent.

Government officials in the U.S., Germany, and Japan have reached out to Taiwanese authorities to assist with the car chip shortage. On Wednesday (Jan. 27), Taiwanese foundries, including TSMC and UMC, after meeting with government officials said they would prioritize automotive chips.

Updated : 2022-05-28 10:30 GMT+08:00