Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker, told the BBC that inflation is pushing up its costs.

TL;DR TSMC’s CFO said inflation is raising costs and won’t rule out price rises, while its CEO said AI chip shortages will last years. Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker, told the BBC that inflation is pushing up its costs and did not rule out raising prices. CFO Wendell Huang said the company would not impose sudden “fourfold, fivefold” increases but acknowledged that costs have risen. “We reflect our value,” he said, pointing to TSMC’s technology leadership and manufacturing scale. The comments came after TSMC’s annual shareholder meeting in Hsinchu, where chairman and CEO CC Wei told investors he would “like” to raise prices, as competitors in the memory chip market have done. Wei said the AI chip shortage would persist for years and that TSMC cannot meet customer demand despite running its fabs at full capacity. “We’re doing everything we can, wherever we can, and however we can,” Huang told the BBC. Despite the public commitment to pricing restraint, TSMC has already begun raising what it charges for its most advanced chips. TrendForce reported in May that the company is weighing a 15% price increase on 3nm wafers in the second half of 2026, with a further 5 to 10% increase expected in 2027. Earlier reports indicated TSMC planned to raise sub-3nm prices 3 to 10% across 2026, with increases mapped through 2029. TSMC makes the most advanced chips designed by Nvidia, AMD, Apple, and virtually every other major semiconductor company, controlling more than 90% of the market at the most advanced manufacturing nodes. Any pricing increase ripples through to the cost of AI infrastructure, and potentially over time, to the prices consumers pay for electronic devices. The company reported $35.9 billion in revenue for the first quarter of 2026, up 41% year-on-year, with advanced technologies at 7nm and below accounting for 74% of wafer revenue. The demand is being driven by an AI infrastructure spending wave that has seen Nvidia alone commit more than $40 billion in equity investments in 2026, while hyperscalers’ combined capital expenditure is projected to exceed $690 billion this year. That spending flows directly to TSMC’s order book, but the company’s costs are rising in parallel as it expands manufacturing capacity in the United States, Germany, and Japan alongside Taiwan. Huang pushed back against the idea that TSMC’s global expansion was driven by political pressure from Washington or Beijing. “We go out of Taiwan to build capacity based on customers’ demand. The customers want us to go there. It’s not the request of government,” he said. TSMC has committed $165 billion to its Arizona operations alone, encompassing six fabrication plants, two advanced packaging facilities, and a research and development centre. But on the question of where the most advanced chips will continue to be made, Huang was direct: the most cutting-edge production will remain in Taiwan. Moving the full manufacturing ecosystem to the United States, he said, would take “five or 10 years, or even longer,” a timeline that directly challenges the ambitions of US industrial policy. The first Arizona fab is producing 4nm chips, but 2nm production at the site is not expected until the end of the decade. The geopolitical backdrop is impossible to ignore. At a recent summit in Beijing, Chinese President Xi Jinping warned that mishandling Taiwan could put the US-China relationship in an “extremely dangerous situation,” while President Trump described a $14 billion Taiwan arms package as a “negotiating chip.” Taiwan produces the majority of the world’s most advanced semiconductors, making TSMC’s fabs in Hsinchu among the most strategically important industrial facilities on the planet. Huang also denied that the AI boom is a bubble. “Our conviction in this AI megatrend is very strong,” he said, citing conversations with customers and with the hyperscalers who are their largest buyers. “These companies are financially very strong with a lot of financial resources, so we believe that they’re able to continue to invest.” Whether that confidence extends to absorbing higher chip prices without passing costs to end users is a question TSMC’s customers will have to answer.

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