TSMC CEO Eyes AI Boom to Boost Demand and Contemplates Chip Price Increases

TSMC's chief executive, C.C. Wei, expressed strong confidence in the company's trajectory, fueled by the surging demand for AI computing power. At their shareholder gathering in Hsinchu, Taiwan, Wei outlined how the AI craze is pushing up the appetite for the sophisticated chips that TSMC specializes in.

Wei mentioned that while customers remain upbeat about AI's future, the company is keeping a close eye on the increasing costs of components. Demand is high, but production capacity is finite - a classic case of supply trying to catch up with an explosion in computing needs.

When questioned about chip pricing, Wei didn't hold back. He said that he'd like to raise prices to protect profitability, but stressed they would avoid abrupt, unsustainable hikes like those sometimes seen in the memory chip sector. TSMC's focus is on long-term stability rather than short-term spikes.

Playing a crucial role in the semiconductor supply chain, especially for heavyweights like NVDA and AAPL, Taiwan remains at the heart of the global race for AI hardware. Wei emphasized the challenges in meeting American customer demand through U.S.-based production, noting it will be a lengthy process to fully ramp up facilities.

Speaking of U.S. operations, TSMC is investing $165 billion into building new fabs in Arizona. Wei believes the current land holdings can support a decade of growth there. Despite its strong market performance - with its share price more than doubling in the past year - the company's stock dipped slightly alongside the broader market recently.

Regarding cutting-edge equipment, TSMC confirmed buying Dutch firm ASML's pricey High-NA EUV lithography machines for research purposes but hasn't integrated them into mass production yet due to cost concerns. The company plans to evaluate economics before committing fully.

Amid labor tensions in the semiconductor sector elsewhere in Asia, Wei highlighted TSMC's commitment to employee profit-sharing, which has grown steadily by around 30% annually the past few years and shows no signs of slowing, signaling efforts to maintain workforce satisfaction.

Looking beyond AI, Wei sees autonomous vehicles and robotics as promising avenues for expanding chip demand in the long haul. Though the geopolitical climate adds complexity, Taiwan's semiconductor prowess remains central in advancing future tech industries.