The world’s largest chip company: Inflation raises costs and price increases are possible economy

The Taiwanese company TSMC, the world’s largest producer of advanced electronic chips, has kept the door open to the possibility of raising the prices of its products in the future, in light of the increasing pressures resulting from inflation and high operating costs, according to an interview conducted by the British Broadcasting Corporation (BBC) with the company’s chief financial officer, Wendell Huang.

The company’s statements are of particular importance, given that TSMC produces the most advanced chips on which companies such as NVIDIA, AMD, and Apple rely, which means that any increase in prices may gradually be reflected in the cost of artificial intelligence infrastructure, and perhaps in the prices of electronic devices that reach consumers.

Electronic chips or electronic chips are small pieces made of silicon, encased in a plastic or ceramic container called a package. Electronic chips work to amplify electrical signals, or act as an on/off switch in computer applications. The chip can be a single transistor, or an integrated circuit that includes an interconnected group of transistors.

Huang told the BBC that inflation “has already caused costs to rise,” but he ruled out sharp increases in prices, explaining that the company would not resort to raising prices “fourfold or fivefold.” He added: “We reflect the value of what we offer,” pointing to the “technological leadership” and “manufacturing excellence” that the company enjoys.

No political pressure

At a time when trade tensions between America and China over semiconductors are escalating, Huang denied that the company’s expansion outside Taiwan was a response to political pressure from Washington or Beijing.

“We are leaving Taiwan to build production capabilities based on customer demand,” he said. “Customers want us to go there. It is not a request from governments.”

TSMC continues to expand its industrial presence in America, Germany and Japan, in addition to its investments in Taiwan. However, Huang stressed that the production of the most advanced chips will remain in Taiwan, explaining that transferring the integrated manufacturing system to America may take “five or ten years, or even more.”

These estimates conflict with the ambitions of US industrial policy, which prompted the company to commit $165 billion in investments in Arizona.

Continuous boom

Despite growing concerns in financial markets about the sustainability of huge spending on artificial intelligence technologies, Huang refused to describe the current boom as a “bubble” that is about to burst.

He said: “Our conviction in this huge trend in artificial intelligence is very strong,” adding that the company is in constant conversations with its customers and with the customers of these customers, “who are mainly represented by the giant companies operating digital infrastructure.”

He added: “These companies are financially strong and have significant resources, so we believe they are able to continue investing.”

Huang’s statements came at a time when technology stocks were under pressure in Asian and American markets, amid fears of inflated valuations of artificial intelligence and electronic chip companies, after a wave of exceptional rises that the sector witnessed over the past year.