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NVIDIA’s rapid growth on the back of the AI boom has made it one of the world’s most valuable companies and has also increased the net worth of CEO Jen-Hsun Huang.
Now, major supplier Taiwan Semiconductor Manufacturing Co. (TSMC) seems keen to join the frenzy.
“I complained to NVIDIA CEO Jensen Huang (the $3 trillion man) that his products were too expensive,” TSMC CEO CC Wei said last week. Nikkei.
Wei was referring to Nvidia’s market capitalization, which surpassed $3 trillion last week. The AI chipmaker delivered another surprise earnings report last month, with first-quarter revenue and profits both beating Wall Street expectations.
Wei added that Nvidia’s products are “certainly very valuable, but we’re also looking to demonstrate our value.”
Wei’s comments sparked speculation that TSMC, the world’s largest contract chipmaker, was considering raising prices. TSMC According to one estimate, The most advanced 90% in the world Processor chip.
TSMC tried to quell market speculation last week, Local Media The company’s pricing has always been “strategic, not opportunistic.”
In April, an analyst asked whether TSMC was benefiting from the AI boom and what the CEO thought about pricing.
“We’re pleased that our customers are doing well. If our customers are doing well, TSMC is doing well,” Wei said.
Nvidia’s Huang doesn’t seem worried about TSMC’s price hikes.
He told reporters in Taiwan: Last week, he said TSMC’s contributions to the industry were “truly incredible.”
“Increasing prices is consistent with the value they provide. I’m very happy to see them being successful,” Huang said.
Morgan Stanley analyst Last week I wrote that Nvidia’s management is likely aware of TSMC’s reliability.
“If NVIDIA accepts the price increases, we believe other major AI semiconductor customers may follow suit,” the analysts wrote in a note.
They projected that Nvidia would account for 10% of TSMC’s revenue in 2024.
TSMC has already hinted at raising production prices outside Taiwan
This isn’t the first time this year that TSMC has signaled a price hike.
Wei said in April that he planned to raise fees for customers who want to manufacture chips outside Taiwan.
““If a customer wanted to enter a particular field, TSMC and the customer certainly had to share the incremental costs,” the CEO said. TSMC’s first quarter earnings report. “Today’s fragmented, globalized environment creates higher costs for everyone – TSMC, our customers, our competitors and the semiconductor industry as a whole.”
Taiwan too Electricity price hike TSMC said in April it would cut production capacity for large industrial users by 2.5% through 2020, putting pressure on its profits. Wei said inflation and electricity costs were driving up costs.
“We expect customers to help shoulder some of the increased costs and we have already begun discussions with them,” he said, declining to discuss details of the company’s pricing strategy during the earnings conference call.
The production of chips used in everything from data centers to smartphones is now a geopolitical concern because global chip production is concentrated in Taiwan, an independently-ruled country that China claims as its own territory.
There are fears that a Chinese invasion of Taiwan would have a negative impact on the global economy and could lead to Beijing seizing control of the island. TSMC facility.
TSMC is diversifying its production Opening a new facility in Arizona Japan, and Germany.
Wei said last week that TSMC was considering moving some chip factories outside Taiwan. impossible All production will be moved off the island.
TSMC’s Taiwanese shares closed down 1.7% at NT$879 a share on Friday, but are up 48% this year. Taiwan markets are closed on Monday for a public holiday.
NVIDIA The company’s shares closed down 0.1% at $1,208.88 per share on Friday after rising more than 140% this year ahead of a 1-for-10 stock split after the close.
TSMC did not immediately respond to Business Insider’s request for comment.