According to Showa Denko, raw materials prices are set to rise at an unprecedented pace. The $550 billion chemical company is one of TSMC’s suppliers.

Showa Denko expects to raise costs and slash unprofitable products as it confronts a series of economic hardships. The company previously faced unpredicted hikes due to supply chain issues and energy costs following COVID-19 and Russia’s invasion of Ukraine. According to Hideki Somemiya (CEO), the situation may remain unchanged until 2023.

Showa Denko

The chemical company supplies crucial materials for chip fabrication to various companies such as Infineon Technologies and TSMC. The company is forced to pass its increasing material costs onto customers. Since it’s the leading supplier of chemicals used in production chains by major chipmakers and various other manufacturers such as Toyota, the hikes can squeeze margins and pressure consumers.

“A big theme this year common to all the players in the materials industry is how much cost burden we’d be able to convince customers to share with us”, the company said. “The current market moves require us to ask twice the amount we had previously calculated.”

Not alone

Showa Denko isn’t alone. Other material suppliers and component makers are taking similar actions to survive a tough market. Customers of various electronics are expected to face increased costs. Chipmakers like Samsung Electronics and TSMC have informed their customers about the expected price hikes.

Tip: TSMC is deploying ASML’s new EUV machine