Taiwanese Wafer Foundries Resort to Price Reductions as Capacity Utilization Falls Short

Mature process wafer fabs have extended their discount strategy as the price-cutting storm caused by oversupply continues. Due to lower-than-expected capacity utilization rates, foundries including UMC, Powerchip, and World Advanced Technology are offering negotiable prices to customers for new orders. Discounts of up to 10-20% are available for customers willing to place large orders, a greater reduction than previous price cuts. This highlights the ongoing trend of the mature process wafer fab market becoming a buyer's market as the oversupply situation continues to worsen. These price cuts are aimed at increasing capacity utilization rates and may have an impact on future profit margins and average selling prices.

It is important to take note of the increasing discounts offered by foundries to attract more orders in the oversupply market. The situation is particularly challenging for the 8-inch wafer fabs as they are facing the greatest impact due to weak market demand and traditional off-season effects.

As a result, it is important to consider the types of ICs that are produced using mature processes, such as power management ICs, driver ICs, fingerprint recognition ICs, and power components, and their potential demand. The 12-inch wafer fabs may have a more stable situation due to the demand for advanced processes and applications such as automotive and 5G communications.