TSMC suppliers: chip material prices will rise further

Showa Denko, a Japanese supplier of semiconductor materials, is expected to further raise prices and cut unprofitable product lines in response to a host of economic challenges facing the semiconductor industry.

The company's chief financial officer, Hideki Somemiya, said in an interview that this is on top of at least 12 rate hikes that have already occurred globally this year, reflecting supply disruptions caused by the new crown epidemic, soaring energy costs caused by the war in Ukraine and a sharp rise in the yen. devaluation effect. The situation is unlikely to improve significantly until at least 2023, he added.

He pointed out that since Showa Denko is a supplier to manufacturers such as TSMC, Infineon and Toyota, the price increase could squeeze manufacturers' profits or force customers to follow suit.

“One of the big themes of common concern for materials companies this year is how much of the cost burden we can convince our customers to share, and current market conditions have forced us to ask for twice the original estimate,” says Somemiya.

Toyo Securities analyst Hideki Yasuda pointed out that Showa Denko is not the only company raising prices, and other parts makers and material suppliers are taking similar moves in response to tough market conditions.