Inflation and Pricing Outlook at TSMC
The world's largest chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC), has informed the BBC that inflation is elevating operational costs and has not excluded the possibility of price increases.
TSMC manufactures the most advanced semiconductor chips designed by firms such as Nvidia, AMD, and Apple. Any price adjustments by TSMC could impact the cost of AI infrastructure and potentially influence the prices consumers pay for electronic devices over time.
Nevertheless, the company's Chief Financial Officer, Wendell Huang, emphasized that the firm would avoid abrupt, substantial price hikes.
"We reflect our value,"Huang stated, highlighting TSMC's
"technology leadership"and
"manufacturing excellence."
Interview Insights and Geopolitical Context
In an exclusive, comprehensive interview, Huang dismissed the notion that the AI surge represents a bubble and refuted claims that TSMC's global expansion is driven by geopolitical pressures.
The semiconductor sector, including TSMC, is central to escalating US-China trade tensions. The US government is encouraging leading chipmakers to increase production domestically to secure critical supply chains.
Taiwan, a self-governed island allied with the US but claimed by Beijing, produces the majority of the world's most advanced chips—tiny processors integral to smartphones, laptops, and AI data centers.
Chinese President Xi Jinping recently cautioned at a summit with US President Donald Trump that mishandling Taiwan could place Sino-American relations in an
"extremely dangerous situation."
The BBC visited Hsinchu Science Park, a dense cluster of fabrication plants north of Taipei, for TSMC's annual shareholder meeting and conducted a rare interview with Huang.
TSMC is expanding manufacturing operations in the US, Germany, Japan, and Taiwan. Huang countered the perception that this expansion is a reaction to pressure from Washington or Beijing.
"We go out of Taiwan to build capacity based on customers' demand. The customers want us to go there. It's not the request of government,"he explained.
Regarding the location of the world's most advanced chip production, Huang was unequivocal: the most cutting-edge manufacturing will remain in Taiwan.
"Moving the manufacturing ecosystem to the US,"he said,
"would take 'five or 10 years, or even longer'"—a timeline that challenges US industrial policy ambitions, which have led TSMC to commit $165 billion to its Arizona facilities.
AI Boom and Market Pressures
While Huang did not definitively commit to price increases, he acknowledged:
"Inflation, yes, did cause [our] costs to increase."
Earlier, TSMC's Chairman and CEO, CC Wei, told shareholders he would
"like"to raise prices, following competitors' actions.
TSMC's stock has surged over the past year amid rising demand for AI chips. Huang described the company as under pressure to meet growth demands.
"We're doing everything we can, wherever we can, and however we can,"he said.
"The customers ask us to grow so much, but all we can do is try to grow as fast as possible. So far, still trying."
Stock markets have also felt pressure, with tech shares in Asia falling earlier this week after a similar sell-off in the US. This followed a remarkable period of gains in global chip and AI-related equities, amid concerns about stretched valuations.
Despite this, Huang maintains that the AI boom is not a bubble poised to burst.
"Our conviction in this AI megatrend is very strong. We talk to the customers and also the customers' customers… who are mainly the hyper-scalers,"he said.
"These companies are financially very strong with a lot of financial resources, so we believe that they're able to continue to invest."
Additional reporting by Jaltson Akkanath Chummar
