The CEO of Nvidia, Jensen Huangpromised to support TSMC in its campaign aimed at increasing prices which will affect i wafer and a specific type of packaging called CoWoS. In fact, several sources claim that NVIDIA and TSMC will discuss chip prices for next year, a strategy that could help the company significantly increase its earnings.
Huang says he is not too worried about the China issue, as Taiwan has a very strong supply chain and TSMC is handling many issues related to the supply chain, as well as chip production.
Moreover, the words of the CEO of Nvidia go in the opposite direction compared to what was declared by TSMC which, in the event of a conflict, has already said it has a way to deactivate its chip production machines remotely.
As we have seen in recent years (and in the COVID period), when TSMC encountered problems of production with consequent delays, many companies of sectors such as automotive, household appliances, consoles and IoT products, they found themselves in serious difficulty undergoing considerable economic damage. Although the situation has improved slightly this year, the supply is still insufficient.
Recently, when talking about its 3nm chips, the company said that even tripling chip production would still not be able to satisfy demand. From this arises the need to increase the production rate or create new production lines to try, at least in part, to satisfy the requests of other producers.
To return to the question of prices, NVIDIA’s profits are very highsignificantly higher than those of other companies such as AMD and even TSMC. Not by chance the company recently overtook Apple in terms of absolute value and it is one step away from becoming the most “precious in the world”, a title that currently belongs to Microsoft.
If TSMC raised prices for these advanced processes, this wouldn’t affect NVIDIA’s bottom line much, but it could reduce the profit margins of other companies such as Apple, AMD and Qualcomm. This price increase would also have an impact on end users but, apparently, these are problems that do not concern Huang and his company.
In a nutshell, the partnership between NVIDIA and TSMC could lead to a significant increase in chip prices, with significant implications for the entire technology sector. While NVIDIA is well positioned to absorb these costs, other companies and consumers may face greater challenges.
