TSMC (2330-TW) supplier Showa Denko warned that semiconductor materials will rise until next year, and Showa Denko cut unprofitable product lines in response to challenges such as soaring energy costs and supply disruptions.
Showa Denko Chief Financial Officer Hideki Somenomiya said further price hikes for wafer materials are expected due to supply disruptions, soaring energy costs due to the war in Ukraine,Japanese YenHeavy devaluation, the situation may not improve significantly until at least next year.
Somenomiya Hideki said that it was forced to pass on the substantially increased costs to customers. Since Showa Denko is a supplier to manufacturers such as TSMC, Infineon and Toyota, the price increase could squeeze manufacturers’ profits or force customers to follow suit.
Somemiya Hideki said: “For all participants in the material industry, a common theme this year is how much we can convince customers to share in the cost. The current market conditions require us to ask for twice the original estimate.”
Toyo Securities analyst Hideki Yasuda said Showa Denko was not alone in raising prices, with other parts makers and material suppliers taking similar measures in response to difficult market conditions. Consumers of durable goods such as electronics may also see higher prices in the future, he said.
Showa Denko has begun terminating the sale of certain items and terminating contracts that have no potential for profit. Somenomiya Hideki said that before the end of the year, it will evaluate which areas to withdraw.
In addition to rising prices for raw materials and natural resources, Somenomiya Hideki said,Japanese YenThe slump presents another challenge.The Bank of Japan’s ultra-easy monetary policyJapanese YenThe exchange rate against the dollar fell to a new 24-year low.
Somenomiya Hideki said: “CurrentlyJapanese YenThe trend is something we don’t want to see, becauseJapanese YenDevaluation further increases the cost of raw materials. As a company, we are limited in what we can do in response. “
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