Internet data centers and large scale industrial users, which include the likes of chip giant Taiwan Semiconductor Manufacturing Co., will see their power tariffs jump by between 15% and 25%, depending on usage. The statement did not specify exactly how large an increase TSMC will face. Household users will face a increase between 3% and 10%.

A rise of less than 30% will have limited impact on TSMC, Charles Shum, Bloomberg Intelligence technology analyst, said in a report earlier this month. Yet, increasingly expensive electricity in Taiwan could pose a long-term threat to the company’s profitability, he said.

The hikes come after the island’s state-owned utility Taiwan Power Co. announced a second consecutive annual loss of NT$198.5 billion in 2023, following an even greater shortfall in 2022 as it attempted to keep power prices low despite rising fuel costs. The utility’s total losses amounted to NT$382.6 billion in 2023, a downward trend that is expected to continue this year.

Taiwan’s central bank unexpectedly raised borrowing costs and upgraded its inflation forecast to 2.16% from its previous estimate of 1.89% to factor in the new tariffs on Thursday, while the central bank governor Yang Chin-long told lawmakers earlier this month that higher power prices may further inflate already stubbornly high consumer prices.

A 15% increase in electricity tariffs could result in a 12% rise in power cost for Vanguard International Semiconductor Corporation, Chairman Fang Leuh told reporters on Friday before the price rise was announced, adding that he was unable to answer yet if costs could be passed on to customers.

Taiwan is largely reliant on imported coal and natural gas, the prices of which surged following Russia’s invasion of Ukraine. Technologies such as offshore wind, which the island is betting on to diversify its energy mix, are dealing with rising costs and increasing delays.

Read More: Taiwan’s Troubled Utility Poses Risk to Chipmakers’ Green Goals

Higher power tariffs are “essential for industrial development” Thomas Wu, chairman of the Chinese National Association of Industry and Commerce told reporters on Wednesday. “Industries hope there will be stable and sufficient power supply and green energy supply.”

Taipower raised electricity prices by an average of 11% last year, with the hikes mainly affecting industrial and residential users who consumed large amounts of electricity.

With assistance from Chien-Hua Wan.

This article was generated from an automated news agency feed without modifications to text.