The CEO of Taiwan Semiconductor Manufacturing Co. (NYSE:TSM), C.C. Wei, issued a warning over manufacturing capacity constraints and signaled openness to future price hikes. During the Thursday pre-market trading session, the stock fell 2.08%.
Wei’s comments were made during TSMC’s annual shareholders’ meeting in Hsinchu, Taiwan, on Thursday, Reuters reported. Despite the rising costs of components, he noted that customers remain positive about the future of artificial intelligence.
On the topic of potential price increases, Wei stated, “I’d like to do that … we still need to make money.” He emphasized that the company has no intention of “suddenly” raising prices and remains focused on long-term, sustainable growth. “We’re not that kind of company,” the CEO said.
Wei also pointed out the growing use of AI models in consumer, enterprise, and sovereign AI applications. He said growing demand is increasing the need for computing power and advanced semiconductor chips, but acknowledged that production capacity remains limited despite the company’s efforts to keep up.
However, the Taiwanese company said that fully satisfying U.S. customers through domestic production will take a “very long time” due to capacity constraints.
TSMC’s Chips May Get Costlier
TSMC CEO’s remarks came just days after a report that the company is considering raising prices for its advanced 3nm chips by 15% in the second half of 2026, with a further 10% increase potentially planned for 2027.
TSMC’s potential price increase could impact the margins of companies like NVIDIA (NASDAQ:NVDA) and Broadcom Inc. (NASDAQ:AVGO). However, it’s important to note that the reason behind the hike is the demand for advanced AI chips outpacing available manufacturing capacity, not a slowdown in business. This is a crucial factor for investors assessing the AI spending boom.
Earlier, Dell Technologies (NASDAQ:DELL) said major AI customers are signing multi-year server deals despite uncertain pricing, prioritizing access to computing power as AI demand continues to outpace supply. Chief Operating Officer Jeff Clarke said securing capacity has become more important than negotiating costs.
As reported in May, TSMC is also focusing on energy efficiency in chip development due to the rising electricity demand from AI. The company aims to achieve 30% power savings to combat the AI energy crisis.
Meanwhile, a report last month suggested that Apple Inc. (NASDAQ:AAPL) is exploring U.S. chip production with Intel Corp. (NASDAQ:INTC) and Samsung Electronics Co. Ltd. (OTC:SSNLF) to reduce its reliance on TSMC. However, concerns about the reliability and scalability of non-TSMC production technologies persist.
Benzinga's Edge Rankings place TSMC in the 97th percentile for quality and the 92nd percentile for growth, reflecting its strong performance in both areas. Benzinga’s screener allows you to compare TSMC’s performance with its peers.
TSMC Price Action: On a year-to-date basis, TSMC stock surged 36.63%, as per Benzinga Pro. On Wednesday, it fell 2.24% to close at $436.69.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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