Japanese chemicals supplier Showa Denko K.K. expects to further raise prices and cut back unprofitable product lines as it grapples with a barrage of economic challenges confronting the $550 billion (¥75 trillion) semiconductor industry.
That’s on top of at least a dozen hikes already this year, reflecting COVID-19 supply snarls, surging energy costs from the Ukraine war and the yen’s dramatic weakening, Chief Financial Officer Hideki Somemiya said in an interview. The situation is unlikely to significantly improve until at least 2023, he added.
Tokyo-based Showa Denko, which supplies essential chip fabrication materials to the likes of Taiwan Semiconductor Manufacturing Co. and Infineon Technologies AG, has been forced to drastically increase the cost it passes on to customers, Somemiya said. Because it’s a key supplier of the chemicals used early in the production chain by chipmakers and other manufacturers like Toyota Motor Corp., its price hikes could potentially squeeze margins or pressure customers to follow suit.