By Wen-Yee Lee
HSINCHU, Taiwan, June 4 (Reuters) – Taiwan’s TSMC, the world’s largest contract chipmaker, is striving to keep up with demand and avoid becoming a bottleneck in the global supply chain during the relentless boom in artificial intelligence, its CEO said on Thursday.
C.C. Wei, speaking at the company’s annual shareholder meeting in the Taiwanese city of Hsinchu, said customers are still upbeat on the outlook for AI, while TSMC is monitoring the impact of rising component costs.
“Customer demand is so high, and we can only support so much. We are already working very hard,” Wei told reporters after the meeting, adding that the rapid growth of AI had left many suppliers – and upstream vendors – struggling to meet demand.
“We are doing our best to ensure TSMC does not become a bottleneck,” he said, adding that such constraints exist throughout the supply chain.
Asked during the shareholder meeting whether TSMC could raise prices for customers, Wei said he would “like to do that”, although he added the company would refrain from the abrupt price hikes that some memory firms have imposed.
“I envy their 80% gross margins, but I would never do that,” he told reporters.
TAIWAN HAS CRUCIAL ROLE IN AI SUPPLY CHAIN
TSMC continues to see increasing adoption of AI models across consumer, enterprise and sovereign applications, with that trend driving demand for greater computing power which in turn supports strong demand for advanced semiconductor chips.
Taiwan plays a crucial role in the global AI supply chain for companies including Nvidia and Apple, and its position is anchored by TSMC.
Wei said TSMC was working hard to meet all customer demands, but that it would take a “very long time” to fully satisfy American customers’ needs with production in the U.S.
TSMC is investing $165 billion to build new factories in the U.S. state of Arizona, where Wei told reporters the company’s two parcels of land there should be sufficient for the next 10 years.
Wei also said TSMC’s previous target of locating 30% of its 2-nanometer-and-below capacity in the U.S. was becoming hard to achieve, citing challenges including delays in obtaining environmental permits and a shortage of construction workers.
He said TSMC’s stock performance over the past year had been remarkable, with its share price climbing to T$2,425 by Wednesday, up from T$950 on June 3 last year.
Its shares were down more than 1% on Thursday, in line with the benchmark index.
TSMC WORKING ON REDUCING COST OF HIGH-NA TECHNOLOGY
Asked whether TSMC wanted to invest in ASML’s next-generation High-NA EUV machines, which can cost up to $400 million each, Wei said his company had purchased the Dutch firm’s High-NA tools and was conducting R&D efforts.
The machines are advanced lithography systems that are used to transfer intricate patterns onto silicon wafers to form integrated circuits and other devices.
“We do not currently need it for production because the cost is still somewhat high,” he said. “We will continue working to lower the cost and maximize its benefits and once the economics make sense, we will bring it into production.”
Amid recent worker tensions over pay in South Korea, where Samsung Electronics last month averted a strike, TSMC said it was fully committed to taking care of its employees, as the beneficiaries of the AI boom come under growing pressure to share more of their rapidly growing income.
“(Our) employee profit sharing increased by about 30% from 2023 to 2024 and again by about 30% from 2024 to 2025,” Wei said. “We are confident it will rise by another 30% in 2026.”
“We believe this represents strong compensation for our employees,” he said, adding there is no ceiling in terms of employee profit sharing as it will continue to grow.
TSMC SEES AUTONOMOUS VEHICLES, ROBOTS DRIVING GROWTH
Looking ahead, Wei said he views autonomous vehicles and robots as long-term growth drivers, and that the company will be working hard to ensure robots can succeed.
Taiwan remains TSMC’s most efficient manufacturing area, which is home to its best talent, core R&D and largest production base, he added.
The island this week hosts the annual Computex conference, where leaders of some of the world’s most powerful tech companies are gathering. Executives from the likes of Nvidia and Intel have heaped praise on Taiwan’s central role in the global supply chain.
“Taiwan will continue to have a very significant advantage in the AI industry. For the foreseeable future, it will not be easy for other countries to compete,” Wei told reporters.
(Reporting by Wen-Yee Lee; Editing by Anne Marie Roantree, Thomas Derpinghaus and Jan Harvey)
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