Tuesday, March 12th 2024
Chip Prices Face Possible Surge as Electricity Prices in Taiwan Set to Rise by 30%?
Prices of semiconductors could see a surge as Taiwan is set to charge "super consumers" such as TSMC as much as 30% more for electricity under the country's utilities pricing revision. A super-consumer is any entity that has drawn over 5 billion kWh over the past two years. The power company won't calculate this on the basis of the entire company, but its individual metering units. TSMC is spread across several manufacturing- and R&D facilities that are likely metered separately from each other. Prices for some of the smaller scale industrial consumers are only set to rise by 5% to 10%.
Taiwanese Minister of Economic Affairs Mei-Hua Wang tried to allay fears in the industry, in a recent comment pertaining to TSMC, saying that the foundry has implemented several energy conservation initiatives, is mainly an export-oriented company, and that even with the price hikes, electricity in Taiwan is among the cheapest in the world. Tom's Hardware provided more context. A kWh of electricity costs about 10 cents (USD $0.10) in Taiwan, in comparison to the state of Arizona, where it costs about 15 cents/kWh. Despite this, electricity is a key input cost for the semiconductor industry, and any price increase will have a direct impact on wafer costs. We'll have to wait and see by how much.
Many Thanks to TumbleGeorge for the tip.
Sources:
TrendForce, Tom's Hardware
Taiwanese Minister of Economic Affairs Mei-Hua Wang tried to allay fears in the industry, in a recent comment pertaining to TSMC, saying that the foundry has implemented several energy conservation initiatives, is mainly an export-oriented company, and that even with the price hikes, electricity in Taiwan is among the cheapest in the world. Tom's Hardware provided more context. A kWh of electricity costs about 10 cents (USD $0.10) in Taiwan, in comparison to the state of Arizona, where it costs about 15 cents/kWh. Despite this, electricity is a key input cost for the semiconductor industry, and any price increase will have a direct impact on wafer costs. We'll have to wait and see by how much.
32 Comments on Chip Prices Face Possible Surge as Electricity Prices in Taiwan Set to Rise by 30%?
Jokes aside...
You're not wrong, whatsoever.
Source: voices in my head
TSMC spends 2.97% of it's revenue on SG&A (Selling general and administrative expenses) which includes rent, utilities, and other overhead. By extension this means electricity is a fraction of that 2.97% figure.
Saying it accounts for 1% of total SG%A would be generous. Now factor in the 30% price increase and that brings you to a mere 1.3%. or a 0.3% price increase in the absolute worst case scenario.
So no, chip prices will not "surge" as the title puts it based off a 0.3% or less cost increase. That's far below inflation and could easily be considered an inflationary adjustment for the power company to maintain the same level of profitability.
It was around 9.3GW (9.300.000kW) of energy per month. So Instead of 930k$ they pay 1,2mil$, or instead of ~45$ per wafer, it is now around 60$ just for electricity.
It is a paper of 2019:
www.sciencedirect.com/science/article/pii/S2351978920300573/pdf?md5=21e48a5f5624e132eb3bc207742bdf35&pid=1-s2.0-S2351978920300573-main.pdf
Since I am not that knowledgeable, I can't tell how close it is to the actual powerusage of TSMC, but I guess that seems pretty close...
Other sources say that TSMC released data that shows that they use around 1kWh per cm² of wafer (also a few years old) and that TSMC uses ~20TW per year for ~30million 8" (equivalent) wafers.
That amounts to ~666kW per wafer. So that 30% would mean an increase of around 20$ per 8" wafer...
Even if they pay double of electricitycost per wafer, that would still be nothing compared to what AMD or Nvidia pays for the whole wafer.... The increase per AD102 chip for example would be less then 3$.
But I know, I know. TSMC puts a 200% markup on that 3$, then Nvidia puts up a 200% markup and then the seller puts up a 200% markup and we land on a 50$ increase for the model on the shelves...
if it’s an individual meter that’s a crap ton of power. Just have to segregate a few buildings and give them a meter to get under…..if that’s a loophole??