[News] TSMC Addresses Speculations of a 20% Wafer ASP Increase, Says Price Is Not the Main Profit Driver

TSMC addresses concerns over potential wafer price increases during its earnings call today, stressing that its strong profitability is driven not only by pricing, but also by robust demand and high capacity utilization.

The comments come after an analyst, during the Q&A session, notes that this would be the second consecutive year in which TSMC’s wafer average selling prices (ASPs) may rise by around 20%, and asks whether such increases could become the new normal as the company ramps up higher-cost overseas fabs.

While Chairman and CEO C.C. Wei describes the question as a difficult one, CFO Wendell Huang says that because each new process node carries its own pricing, wafer prices naturally trend higher over time, lifting blended ASPs. He stresses, however, that pricing is only one element of the company’s broader profitability.

Huang says six factors influence profitability, with pricing being just one of them. In recent years, he notes, pricing gains have largely gone toward offsetting higher costs for tools, equipment, materials, and labor, rather than directly expanding margins. The more decisive driver of profitability, he adds, is a high utilization rate, supported by strong demand and disciplined capacity planning.

Expanding on that point, Huang highlights capacity planning as a key competitive advantage. He says TSMC continues to optimize capacity across process nodes, including converting portions of its N5 capacity to N3, while also enabling cross-node support that allows capacity to be reallocated from mature nodes to more advanced ones. This capacity optimization across nodes, particularly for advanced processes, plays a critical role in sustaining TSMC’s profitability.

Meanwhile, in response to questions about whether it is cutting 8-inch wafer output, TSMC says it is indeed reducing production, but emphasizes that it will continue to meet customer demand. The company adds that it will allocate resources more flexibly and optimize capacity deployment to better support its customers.

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(Photo credit: TSMC on LinkedIn)