tsmc takes bold step to counter monopoly claims
Taipei, Friday, 20 December 2024.
Taiwan Semiconductor Manufacturing Company (TSMC) is adopting an unusual strategy to fend off monopoly accusations by deliberately accepting financial losses. This move is designed to showcase its commitment to fair pricing and competitive practices in the semiconductor industry. TSMC’s approach aims to alleviate concerns about its market dominance and reassure stakeholders about its pricing strategies. By strategically incurring losses, TSMC intends to demonstrate that it does not engage in monopolistic behavior. This tactic could influence the perception of regulators and the public, positioning TSMC as a company prioritizing market health over profits. The decision reflects TSMC’s proactive measures in navigating the complex landscape of antitrust scrutiny, especially as it holds a significant share of the global advanced chip market. The implications of this strategy could be far-reaching, potentially setting a precedent for how tech giants address similar regulatory challenges.
Market dominance and antitrust concerns
TSMC faces mounting scrutiny as it produces over 90% of the world’s advanced chips [2]. Chris Miller, author of ‘Chip War,’ points out that the company’s position mirrors other trillion-dollar tech firms that have faced antitrust investigations [2]. Miller draws parallels to Intel’s historical antitrust issues, suggesting TSMC could face similar challenges if its market share approaches 98% [2]. The company’s strategic response includes redefining the semiconductor industry scope to reduce its perceived market share from 61% to approximately 28% [1].
Strategic financial decisions
In a notable move to counter monopoly accusations, TSMC has implemented a strategic approach of accepting financial losses [1]. This tactic aims to address concerns about the company’s ability to control market prices despite its dominant position [1]. The company’s pricing strategy has gained particular attention as it plans to charge premium rates for chips manufactured at overseas facilities, with U.S.-made chips potentially costing 20-30% more than those produced in Taiwan [5].
Global competition landscape
Despite TSMC’s market leadership, Miller predicts that competitors Samsung and Intel will maintain their presence in the foundry business [2]. The U.S. government’s support for Intel through initiatives like the CHIPS Act indicates efforts to sustain competition in the semiconductor market [2]. This competitive landscape is further complicated by recent developments in China, where authorities announced an investigation into NVIDIA for potential antitrust violations [5], highlighting the complex geopolitical nature of semiconductor industry regulation.