TSMC Electricity Price hike

Chip Prices Face Possible Surge as Electricity Prices in Taiwan Set to Rise by 30%

Though Taiwan's electricity prices are currently lower than some regions (e.g., Arizona), even a moderate increase can significantly impact chip manufacturers.
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In recent developments, Taiwan, a global hub for semiconductor manufacturing, has announced a significant change in its utilities Electricity Prices structures in Taiwan.

The impending change is set to impact “super consumers,” with industry giant TSMC potentially facing a surge of up to 30% in electricity costs.

This shift has sparked concerns within the semiconductor industry, given that electricity serves as a critical input cost in semiconductor production.

Taiwan’s Electricity Price Hike: The Taiwanese government is raising electricity prices for “super consumers” by up to 30%. These are industrial users who have consumed a massive amount of power (over 5 billion kWh in the past two years). A major chip manufacturer, TSMC, falls under this category.

Impact on Chip Prices: Semiconductor production is energy-intensive, and electricity is a significant cost factor. A 30% hike could translate to higher wafer (silicon disc used for chip manufacturing) costs. This could eventually lead to increased chip prices.

Uncertainty on Price Increase: It’s not yet clear how much chip prices might rise. While electricity represents a key cost, other factors also contribute. We’ll need to assess the extent to which the final chip production cost is affected.

Context on Electricity Prices: Though Taiwan’s electricity prices are currently lower than some regions (e.g., Arizona), even a moderate increase can significantly impact chip manufacturers.

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Background of Electricity Prices in Taiwan:

The new pricing revision targets entities that have consumed over 5 billion kWh over the past two years, categorizing them as “super consumers.”

Importantly, the pricing will be calculated based on individual metering units rather than the entire company.

TSMC, being a major player in the semiconductor space, operates across multiple manufacturing and research facilities, which are likely to have separate metering units.

This distinction highlights the complexity of the situation and the potential variability in the impact on different parts of the industry.

Read More:SK Hynix to Unveil 16-layer HBM3E technology for the first time at ISSCC 2024 – techovedas

Government Perspective on Electricity Prices in Taiwan:

Taiwanese Minister of Economic Affairs Mei-Hua Wang sought to ease industry concerns by emphasizing that TSMC has implemented various energy conservation initiatives.

Additionally, Wang pointed out that TSMC is primarily an export-oriented company, and despite the impending price hikes, such as Taiwan still offers some of the cheapest electricity rates globally.

However, the reassurance does little to alleviate the industry’s worries about the direct impact on wafer costs.

Read More: U.S. Set to Indefinitely Suspend Equipment Restrictions for Samsung and SK Hynix in China – techovedas

Electricity Costs and Global Comparison:

As of now, the cost of a kilowatt-hour (kWh) of electricity in Taiwan stands at around 10 cents (USD $0.10), notably lower than the 15 cents/kWh in the state of Arizona, USA.

While Taiwan continues to provide relatively affordable electricity, the semiconductor industry remains sensitive to any increase in input costs.

Even with the lower rates, the sheer scale of electricity consumption in semiconductor manufacturing makes the proposed price hikes significant.

Potential Impact on Semiconductor Prices:

The semiconductor industry operates on thin profit margins, and any increase in production costs, including electricity, can directly impact the final product prices.

As Taiwan is a key player in global semiconductor production, such as the announced electricity pricing revision is likely to have a ripple effect on the industry as a whole.

Moreover, Smaller-scale industrial consumers may face a more modest increase of 5% to 10%, but for major players like TSMC, the 30% surge could result in substantial changes in the overall cost structure.

Read More:Samsung and SK Hynix Halt 2nd Hand Equipment Sales to China over Fears of US Backlash – techovedas


The upcoming surge in electricity prices for “super consumers” in Taiwan, particularly affecting semiconductor manufacturing giants like TSMC, raises concerns about the potential impact on semiconductor prices worldwide.

The semiconductor industry, already grappling with supply chain disruptions and increased demand, now faces the challenge of adapting to higher input costs.

As the situation unfolds, stakeholders will closely monitor how these changes reverberate throughout the semiconductor landscape and, ultimately, influence the prices of the electronic devices we rely on daily.

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