TSMC will give priority to producing automotive chips

The crisis of chip shortage has intensified, and global car companies are forced to reduce production, and chip prices are unstoppable. Global chip production giant TSMC has also reported that it will increase the price of car chips.

On Monday, 25th Eastern Time, the media quoted local government departments in Taiwan as saying that if capacity can be expanded, TSMC will optimize the production process of chips by improving efficiency and give priority to the production of automotive chips. TSMC later stated that its current production capacity has been fully utilized. If it can increase production, it will optimize production capacity and cooperate with the government. The increased production capacity is mainly used in automotive chips.

The media mentioned that Peter Altmaier, the German Federal Minister of Economics and Energy, has sent a letter to Taiwanese officials seeking to persuade local manufacturers to help alleviate the shortage of semiconductor chips in the automotive industry.

Another media report said on the same day that Taiwanese chip foundries such as Taiwan Semiconductor Manufacturing Co., Ltd. are considering increasing chip prices. The price increase is mainly for automotive chips, with an increase of up to 15%, and it will be implemented as soon as late February this year. TSMC, UMC and other companies have inquired about price increases from customers of automotive chip manufacturers such as NXP in the Netherlands and Renesas Electronics in Japan.

The media pointed out that Taiwanese manufacturers are considering substantial price increases mainly due to the severe shortage of automotive chips and the appreciation of the New Taiwan dollar. The governments of Germany, the United States and Japan have all requested the Taiwan authorities to increase production due to chip shortages. The New Taiwan dollar has risen about 5% against the US dollar over the past year.

If the above news is true, car chips will usher in another wave of price increases, because the media mentioned earlier that companies such as NXP and Renesas Electronics have asked car companies for price increases.

And the above news is not groundless. In the conference call after the earnings report was announced last Thursday, TSMC CEO Wei Zhejia said that as demand in the automotive supply chain picks up, the shortage of automotive supply has become more obvious, “At TSMC, this is our top priority.”

Recently, local media in Taiwan have reported that UMC intends to raise its quotations again after the Spring Festival in February, with an increase of up to 15%. This is the second time the company has raised quotations in six months.

Due to the impact of the new crown pneumonia epidemic, chip production and shipments have been delayed, and the market’s demand for 5G mobile phones, notebooks and other home electronic products has surged, and consumer enthusiasm has resumed early. This has caused a shortage of chip supply but a rapid increase in demand. The global chip production capacity is tight. In recent years, the automobile industry, which has become the main consumer of computer chips, has been hit hard.

German car companies Daimler and Volkswagen both admitted that they were affected by the supply bottleneck of the entire industry. Ford, Fiat Chrysler, Toyota and other auto companies all said this month that they would cut car production due to chip shortages.

The American Bernstein Research Company predicts that the global automotive chip shortage in 2021 will cause the loss of up to 4.5 million car production, equivalent to nearly 5% of the global annual car production.