Wafer Foundry Costs Rising, Likely to Trigger Further Price Hikes as Semiconductor Inflation Spreads

(CNA reporter Chang Chien-chung, Hsinchu, June 14) Facing continuously rising costs, wafer foundries may further increase their manufacturing prices. In response, IC design firms are also expected to raise prices, potentially prolonging semiconductor inflation and introducing new uncertainties into end-product markets such as smartphones.

Rising prices for water, electricity, and raw materials, coupled with increased demand for labor and production capacity, as well as the need for multi-regional manufacturing due to geopolitical considerations, are intensifying cost pressures on wafer foundries.

To mitigate the impact of rising costs, Powerchip Semiconductor Manufacturing Corporation (PSMC) and Vanguard International Semiconductor Corporation (VIS) have already implemented gradual price hikes this year. United Microelectronics Corporation (UMC) plans selective price increases in the second half of the year and intends to hold broader price adjustment discussions with customers in the coming year.

Vanguard has expressed openness to future price adjustments, stating that if costs continue to rise or further investments are required, it will assess market dynamics, competitive conditions, and customer demand to determine pricing flexibility.

Dr. C.C. Wei, Chairman and CEO of Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest foundry, responded to shareholder inquiries about price hikes during the annual general meeting by saying, "We want to raise prices — we are actively working on it." TSMC's gross profit margin has steadily climbed from over 40% in the past, to over 50%, and now exceeds 60%, which Wei attributed to the collective efforts of TSMC employees. He emphasized that wafer price adjustments are meant to recover the company's rightful value, but clarified that TSMC would not abruptly raise prices by fourfold, as seen in memory manufacturers.

MediaTek, a leading IC design firm, noted that surging demand for AI computing power is driving technological upgrades and structural changes across the global supply chain. The company stated that price increases throughout the supply chain are becoming the "new normal" and that it will continue collaborating with suppliers while considering moderate price adjustments to pass on rising supply chain costs.

Beyond wafer foundries, backend packaging and testing firms have also raised prices. Sensor chip maker PixArt and display driver IC manufacturer Tenxsys have both signaled potential price hikes to maintain stable gross profit margins.

Rising prices for chips and other components are adding uncertainty to end-product markets like smartphones. Device manufacturers are adjusting their product strategies by focusing on high-end models and revising pricing, but this could dampen consumer willingness to spend, potentially leading to lower sales volumes. (Editor: Chang Liang-chih) 1150614