It was reported on July 5 that Showa electric, a Japanese chemical industry supplier, is an important manufacturing material supplier for chip manufacturer TSMC. The company recently said that raw material costs are rising at an unexpected rate, so it began to raise prices and cut unprofitable product lines. Showa Electric is expected to further raise product prices to meet a series of economic challenges facing the entire chip industry. The chief financial officer of the company, Tamaki Miyagi, said in an interview that the price increase was due to the fact that central banks around the world have raised interest rates dozens of times since this year. In addition, it was also affected by the tight supply chain caused by the epidemic, the soaring energy costs caused by conflict, and the sharp depreciation of the yen. Rangong Xiushu added that the situation is unlikely to improve significantly until at least 2023. Showa electric, headquartered in Tokyo, supplies key chip manufacturing materials to companies such as TSMC and Infineon technology. Tamaki Miyagi said that the company was forced to significantly raise product prices. As this company is a key supplier of chemicals used by chip manufacturers and other manufacturers such as Toyota in the early production process, its price rise may squeeze profit margins or force customers to raise prices. "A major theme of common concern for all enterprises in the material industry this year is how much we can persuade our customers to share with us," said dye Miyagi "The current market trend requires our asking price to be twice the previous calculation." Hideki Yasuda, an analyst at Toyo securities in Japan, said that it was far from Showa electric that raised the price, because other parts manufacturers and material suppliers were also taking similar measures to deal with the increasingly severe market situation. Hideki Yasuda added that prices of consumer durables such as electronic products will also be raised in the future. It is reported that chip manufacturers such as TSMC and Samsung Electronics have informed their customers that they plan to raise prices. In addition to raising the price of products, Showa Electric has begun to terminate the sales of some types of products and terminate customer contracts, because the company believes that these products have no profit potential. Dye palace Xiushu said that Showa Electric will decide which fields to withdraw in the second half of this year. Over the past 12 months, Showa Electric's share price has fallen by a total of 31%. Tamaki Miyagi also said that in addition to the rising prices of raw materials and resources, the continued weakness of the yen is another important problem facing the company. The ultra loose monetary policy implemented by the Bank of Japan pushed the exchange rate of the yen against the US dollar to its lowest level in 24 years. "The current trend of the yen is very disadvantageous to us, because the continued weakness of the yen will further push the plateau material costs," said rangong Xiushu. "As a company, we can take very limited measures to deal with the weak yen." Tamaki Miyagi once worked as a banker at JPMorgan Chase. Last year, he just changed jobs from Sony to Showa electrician as CFO, and became the right-hand assistant of CEO Yingren Takahashi to promote the company's reform. Last year, rangong Xiushu criticized Showa electrician for being too naive in negotiating prices and leaving profits on the negotiating table. Since then, Showa's employees have become more determined in the negotiation, but in part because they have no choice, which may be a positive change that market turmoil can bring to the company. "At present, the rise in material costs has no positive significance, but employees who are used to accepting customers' requests for price cuts are beginning to think more and more strongly that in the long run, an appropriate price increase is the best for us and our customers," said dye Miyagi (Xinhua News Agency)
Edit：Li Jialang Responsible editor：Mu Mu
Source：ithome.com
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