Showa Denko K.K., TSMC's supplier, Expects More Price Increase for Chip Materials by 2023

Tokyo-based Showa Denko K.K., a key chemicals supplier used in the early stages of a chipmaker's production chain, expects chip material prices to continue to rise. The company is being forced to cut unprofitable product lines to counter the economic challenges facing the semiconductor industry.

In an interview with Bloomberg News Chief Financial Officer Hideki Somemiya said that there have already been at least a dozen price increases this year, reflecting supply disruptions to Covid-19, rising energy costs and a sharp weakening of the yen. The situation is unlikely to improve significantly until at least 2023. Consequently, Tokyo-based Showa Denko, which supplies essential materials for chip production to companies such as Taiwan Semiconductor Manufacturing Company and Infineon Technologies AG, has been forced to increase costs sharply, leading to higher prices.

Other companies, like Showa Denko, are taking steps to cope with the difficult market situation, Toyo Securities analyst Hideki Yasuda said. Consumers of durable goods such as electronics will not escape further price increases, he added. Chip makers such as TSMC and Samsung Electronics have notified their customers of their intention to raise prices.