TSMC 3nm Production and US Manufacturing Expansion News

The world’s largest chipmaker, TSMC, reported a 35% jump in first-quarter revenue on Friday sherwood.news/markets/tsm..

Upbeat signals about the AI business are proliferating. The latest was chipmaking giant Taiwan Semiconductor Manufacturing Co.’s first-quarter report on Thursday, showing revenue growth of 40.6%, above the top end of its projected range. The company raised its full-year growth rate to above 30%. According to TSMC CEO C.C. Wei, “AI-related demand continues to be extremely robust.”  Wei said he based that assessment both on comments from TSMC’s customers—it makes chips on behalf of various chip designers, led by Nvidia—and on the cloud firms that buy chips from Nvidia. That suggests quarterly earnings coming later this month from the big tech firms will echo his upbeat commentary. It’s little wonder that the big tech stocks have gained a lot of ground since late March—Microsoft, the worst performer so far this year among the big names, is up 18%, for instance, while Nvidia is up 20%. The Nasdaq is up 16% in the same period.

Inflation! Forget the price of eggs. The cost of chips is set to rise even further—and we’re not talking about potato chips. The Asian news outlet Nikkei reported on Tuesday that TSMC, the dominant manufacturer of chips in the world, was set to raise prices by up to 10% next year, “to reflect rising costs for materials, manufacturing equipment and construction of new overseas chip plants.” asia.nikkei.com/business/..

The report followed one from last week that ASML, the primary maker of chipmaking equipment and therefore a key supplier to TSMC, is planning to raise its prices—by 10% for one of its main equipment models. ASML, which is overwhelmed with demand for its equipment and is expanding its capacity, had room to raise prices, executives acknowledged on an earnings call that day. The folks at TSMC, which also reported last week, didn’t give any such indication on their earnings call, to be sure—instead CEO C.C. Wei emphasized that TSMC wanted its customers to succeed and therefore “we don’t suddenly increase our price by…4x or 5x,” a reference to the price increases that memory chip makers have passed on lately. But Wei didn’t address the possibility of a much smaller price bump, other than noting TSMC faced “very strong” demand stretching out several years, which is causing it to invest heavily in new capacity. How would a 10% price increase from TSMC flow through? Remember that its clients include all the major tech firms, including Nvidia, Apple and Google, all of which design their own chips. They’re all struggling to get enough manufacturing allocation at TSMC, so they wouldn’t have much room to push back against a price rise. The likelihood of higher chip costs would add to other rising prices, including those related to data centers—such as for power—which have bedeviled firms like Oracle. All this is a good reminder of the steep cost of fancy new AI technologies. bloomberg.com/news/articl..