Chip Hub Taiwan to Raise Power Prices from Mid-October
(Bloomberg) -- Taiwan, home to some of the world’s biggest chipmakers, will raise its electricity rates again from mid-October in a move that will impact the island’s industrial users.
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Industries will face an average 12.5% hike in power prices from October 16, according to Taiwan’s Economics Ministry. The decision will affect energy bills for bigger users, including the likes of Taiwan Semiconductor Manufacturing Co.
Semiconductor firms will see tariffs rise about 14%, according to state utility Taiwan Power Co. The move will also mean higher costs for companies including United Microelectronics Corp. and Taiwan’s largest steel company, China Steel Corp., Taipei-based news website CNA reported. China Steel could see a NT$942 million ($29.6 million) increase to its annual electricity bill, CNA added, citing the company.
The second price hike of the year comes as the island expects power consumption to grow by an average 2.8% a year through 2033, thank mainly to demand from the AI sector. Taiwan last raised its power rates in April, when industrial users saw their power bills go up 15% to 25%. TSMC saw the highest increase, which was expected to weigh on the company’s bottom line.
State utility Taipower faced hefty losses over the past two years as it tried to keep prices low even as fuel grew more expensive. The utility announced a second consecutive annual loss of NT$198.5 billion in 2023, following an even greater shortfall in 2022.
Taipower blames its losses on the sharp rise in international fuel costs following Russia’s invasion of Ukraine. Even though those prices have fallen, they are still higher than before the war, the utility said in a statement last week. Compared with the rest of the world, Taiwan’s tariff adjustments are slower, it added.
The island is largely reliant on imported coal and gas to power its tech-dominated economy. Efforts to build out new energy like offshore wind, which the island is betting on to diversify its energy mix, are facing increasing delays and challenges. The island will also shut its final nuclear reactor next May.
(Updates with start date of price hike in second paragraph, comments in third paragraph)
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