War in Ukraine has impacted company’s costs, TSMC

Taiwanese chipmaker TSMC said on Thursday that while war in Ukraine has impacted the company’s costs, customers need not worry about the impact being passed on in price hikes.

“War happening in a far away place – the Ukraine war – has ripple effects that reach us,” said Taiwan Semiconductor Manufacturing Co’s CEO C.C. Wei, speaking at the company’s annual technology showcase in the chipmaking hub of Hsinchu.

TSMC is the world leader in manufacturing advanced chips used in technology from smartphones to data centres.

Wei said the war and inflation have increased costs, with the company paying up to six to seven times the normal price for neon gas, critical for the lasers used to make chips.

Two Ukrainian suppliers, which produced about half the world’s supply of semiconductor-grade neon, halted operations last year.

But Wei told the forum, attended by clients including Taiwan chip designer MediaTek (2454.TW), that TSMC is working hard to manage costs and customers need not to worry about the chipmaker raising prices.

While TSMC said last month that it expects growth in the global chip market this year, excluding memory chips, to decline in the mid-single digit percentage range year on year, the company’s dominance in making advanced chips for high-end customers such as Apple (AAPL.O) has shielded it from a broader industry downturn.

George Liu, senior director of business development at TSMC, said specialty chips present a “very big” opportunity, driven by electrification and automation trends in the auto industry.

Wei also pointed to artificial intelligence (AI) and 5G as key areas for business growth in an era of smart cars, smart homes, and smart cities.

“The only thing AI and 5G can’t do is make our politicians smarter,” Wei joked. Reuters