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Up to 30%!Wafer foundry prices rose again in the third quarter, and closed test and chip design manufacturers are expected to follow Jun 18 , 2021

June 15th, Taiwan media reported that as the supply of mature foundry processes increased, the industry reported that foundry prices will increase by up to 30% in the third quarter, far higher than the market expectation of 15%.At the same time, IC design industry will also rise in price in the third quarter.


Wafer foundry prices rose as much as 30% in the third quarter

Reported that the supply chain analysis, the epidemic driven home office, online teaching trend makes laptops, tablets and other terminal sales, vehicle demand also soared, driving panel driver IC, power management IC, microcontroller (MCU), the dosage of CIS image sensor chip, the chip mainly mature process production,Under the background of large-scale clamping capacity of chip plants, the mature production capacity of foundry foundries such as TSMC, UMC, WWC and SMC has been wiped out by customers by the end of this year, pushing up the quotation all the way.


The news said that in the third quarter of this wave of price increases, UMC, LMC are the most popular customers, the biggest price rise, Taiwan Semiconductor, the world advanced will also be adjusted in accordance with the market conditions.


The big four foundries have not commented on prices in response to rumors of price increases.

However, UMC yesterday stressed that this year's average selling price (ASP) will be double digit growth;Huang Chongren, chairman of LMC, previously said publicly that "now the semiconductor foundling price has been rising every quarter without any trace of decline". The wafer manufacturer can say that it is gaining the upper hand. "If the gross profit margin of IC design customers exceeds mine, I will surely raise the price!".Highlight the situation of the price rise full of confidence.


Thanks to robust client demand and price increases, UMC announced on June 4 that its revenue in May reached NT $17.189 billion, breaking the NT $17 billion mark for the first time, with a monthly increase of 4.93% and a year-on-year increase of 16.57%, setting a new record.The cumulative revenue in the first five months of this year was NT $80.668 billion, up 11.93% year on year, also a record high for the same period of the year.


UMC said the outlook for demand in the second quarter continues to outstrip supply, driving up wafer shipments and dollar-denominated average selling prices. It expects wafer shipments to rise 2 percent, ASP to grow 3-4 percent, gross margin to challenge the 30 percent mark and capacity utilization to remain at 100 percent.

UMC previously said that considering the delivery date and geopolitics, and there will be no significant capacity increase in the market in the next one to two years, it is expected that the capacity squeeze in mature processes will last at least one to two years, and will not ease until 2023.


As demand continues to be strong, also let the foundry order lead time significantly longer.Supply chain, umc, for example, a new product with 12 inch wafer production, fastest delivery for 17 weeks, may the slowest quarter or two or even three quarters, 8 inch wafer is faster is 14 weeks, the slowest for up to two quarter, compared with the past two months can be delivered to the general customer verification, the current delivery than in previous years, on average, the long one and a half months.

Although there have been many rumors of order cuts in various end markets, we have not seen any cuts in UMC's 8-inch or 12-inch mature processes. Demand is still 1.3 to 1.4 times higher than supply capacity. Wafers are expected to remain out of stock until the second half of the year, and the annual average selling price is expected to grow 10 percent from last year.


The longer lead times have also allowed foundries to fend off fears of a slowdown in end demand. The market had previously expected them to revise their quotations in the third quarter, with price increases of around 15 percent. However, recent reports have suggested price increases of up to 30 percent depending on different customers and different processes, far higher than industry expectations.


In addition to the third quarter foundry prices will collective rise, semiconductor sealing pricing will also rise again in the third quarter.According to the previous news, the current closure and testing of the big factory Yueguang cast control line packaging orders increased, the market came out, Yueguang the third quarter to customers will cancel the past will have 3% to 5% price discount, along with the trend of short supply and reflect the rise in raw material prices, not only the price discount cancelled, but also to increase 5% to 10%.


In addition, this month's COVID-19 outbreak at Jingyuan Electronics, a major manufacturer in Taiwan, led to a short factory shutdown, as well as the loss of production capacity due to the 14-day shutdown of thousands of foreign employees, which also exacerbated the shortage of production capacity and increased the demand for higher prices.


Chip designers will follow suit

As upstream foundry and closing prices continue to rise, chip designers will also start to raise prices in the third quarter to cope with rising costs, with drive IC and microcontroller (MCU) chips leading the way.


According to Taiwan media reported previously, as heating up again in the second quarter of the global epidemic, the market for health products and all kinds of small home appliance such as demand continues to increase, pushing up the demand for MCU, and at the same time, the shortage of wafer foundry capacity remains, the global capacity IDM companies have strengthened in the automotive, industrial, and high-end consumer market, and make consumer chip supply more nervous,The gap between supply and demand continues to widen by more than 20 per cent.In addition, the cost of the upstream foundry and sealing quotation continues to rise, so that the relevant manufacturers have increased the chip quotation to respond.


On June 1 this year, STMicroelectronics has once again increased its product price across the board, which is also the second time that STMicroelectronics has started price increase measures since 2021.Recent industry rumors, including Taiwan Yilong, Shengqun and other MCU operators, will increase prices again in the third quarter, of which, Yilong is the third increase this year.According to the source, Shengqun will raise the price of its products by 10 to 15 percent from August to reflect the increase in production costs. This is the second increase of the Taiwan-based MCU manufacturer after an overall increase of 15 percent in April.In addition, the new Tang, Song Han and other MCU plants are also intended to follow up the rise.


It is worth mentioning that Shengqun disclosed in April that, thanks to the continued strong demand of the mainland market, the company has fulfilled its orders in 2021, and the delivery period has reached six months. It has started to undertake orders for next year, and the latter will receive a 30% deposit in advance.This shows the high demand.

In addition, although the recent smartphone market cut single rumors, while the spread of a specific driver chip factory under the repair of the amount of chip, but most of the driver chip factory stressed that the market situation is not the same, and the demand in the non-mobile phone field is still strong, production capacity all the way to the first half of next year.In order to cope with the upstream foundry and closed test capacity price increases brought about by the cost of the recent market is also coming out, the driver chip manufacturers also plan to increase the price in the third quarter, increase by 10%.


Taiwanese driver chip maker Silicon will raise prices for the third quarter, Taiwan media reported, marking the company's third price hike this year.In addition, Lianyong, Duntai, Tianyu, Jinhong and other driver chip manufacturers may also follow up.


It is understood that Silicon driver chip mainly focuses on non-mobile phone applications, including mobile devices, industrial control, vehicle applications, etc.It is understood that last year, Silicon first for mobile application driver IC increase, industrial control and vehicle application products in the first quarter of this year, the price of mobile application driver chip increase again in the second quarter, to reflect the cost rise since this year, now the market has its driver IC price, will be increased in the third quarter.Industry evaluation, from the beginning of the year to the third quarter, Silicon's drive IC price increase may be up to 30 percent.


For the above product price rumors, Sheng Qun admitted that to reflect the cost, the third quarter does have to adjust the price plan;Yilong and Silicon declined to comment.Duntime said it would not raise prices on its own initiative but had to reflect costs appropriately depending on the situation.


In addition, according to the released revenue data in May, MediaTek, Linyong, Raytek, Silica, Duntai, Tongjia, Huaxun and other seven chip design manufacturers in May revenue hit a new high.For example, MediaTek's May revenue was NT $41.326 billion, up 13% from the same month last year and up nearly 90% from the same month last year.Cumulative revenue for the first five months of the year was NT $185.93 billion, up nearly 80% from a year earlier.


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