TSMC chips Made in USA will be 30% more expensive

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TSMC is the world’s largest semiconductor foundry, which produces the most advanced chipsets for computers, phones, and many other electronic devices. It’s based in Taiwan, but it also owns factories outside the island, mostly in Asia. Now TSMC chip price rise is on the horizon, so we can expect more expensive smartphones too.

Recently, TSMC invested a lot of money in plants located on US soil. One of the largest will be the one in Arizona, which will produce 3nm and 5nm chips.

Why is TSMC chip price rise inevitable?

The story of this TSMC’s investment is pretty long, and it reflects the US’s wish to move advanced chip production away from China. The problem, though, is that this strategy leads to more expensive production costs, because of many factors. One of them is, of course, more expensive labor. The other, and maybe more significant is the fact that most of the supply chains rely on the Asia region, so moving the production across the Pacific is not quite cost-effective.

Digitimes now reports that TSMC is developing a new strategy, which will result in rising prices of production in overseas plants, including  Japan. Chips that are currently produced in Japan are 10% to 15% higher than those in Taiwan.

When the Arizona plant once starts production, the price of chips produced there will be approximately 3o% higher. This will result in the overall price rising for 3 nm and 5 nm produced overseas.

Digitimes mentions one more reason for rising prices, and that is maintaining the current margin rate of 53%, which is important to keep investors.

Due to these new conditions in the market, some customers are considering moving to Samsung. Furthermore, TSMC is already struggling to maintain Apple’s demands. We’ve seen some rumors that the Cupertino-based company could book the whole of TSMC’s 2023. production.

Will this affect the smartphone industry?

TSMC chip price rise will surely rise the production costs of smartphones. More expensive processors take affect to smartphone production directly. Not only in terms of more expensive parts but also due to rising manufacturers’ margins accordingly. We’ve already seen that the iPhone 15 lineup will be more expensive. Now we just have to wait to see what will other do.