TSMC CEO C. C. Wei says an endemic shortage of low-end chips costing $0.50 to $10 is holding up production in key segments of the global supply chain
An endemic shortage of chips costing anywhere from 50 cents to $10 is slowing down swathes of the $600 billion semiconductor industry …
Context & Ripple Effects
The chip story has inverted over the past year. In late 2021, Harvard's Willy Shih was explaining why even Biden's $52B for chip manufacturing might not be enough for the US to catch up to TSMC; by March 2022, chairman Mark Liu was flagging slowing consumer demand for smartphones, PCs, and TVs as the next risk.
Wei's new framing cuts through that swing: the shortage isn't a pandemic-era anomaly but 'endemic' — and it's not in the cutting-edge nodes everyone subsidizes, it's in the $0.50-to-$10 mature-node parts that sit inside nearly every finished product. That reframes the shortage as a permanent feature of the industry's economics rather than a cycle to wait out.
First-order effects
- Device makers and industrial buyers who already secured advanced chips still can't ship finished products, because the cheap controller, power-management, and analog parts are the ones gating assembly lines.
- TSMC's mature-node capacity allocation becomes the scarce resource customers fight over, even as attention and capital stay fixed on its leading-edge business.
Second-order effects
- Pricing pressure builds at the trailing edge: TSMC has already signaled it will charge more for chips made outside Taiwan, citing a 'fragmented globalization environment', and reportedly plans price increases of up to 10% across advanced and mature production — cheap chips stop being cheap.
- Expansion of mature-node capacity runs into the same wall TSMC and Samsung face on the leading edge — a manufacturing equipment shortage — so the supply response to an endemic shortage is itself constrained.
Third-order effects
- If the pattern holds, the industry structurally splits: a subsidized, geopolitically driven leading edge alongside a chronically undersupplied, low-margin trailing edge that no one's incentives favor building out — meaning end-product makers carry shortage risk indefinitely.
- Policy built around leading-edge catch-up (the $52B debate Shih walked through) misses where the bottleneck actually sits, pushing governments toward a second, less glamorous round of intervention aimed at legacy nodes.
The trend: The semiconductor industry is bifurcating into a capital-saturated leading edge and a permanently tight, low-margin mature-node tier whose shortages gate the whole supply chain.