IC Manufacturers Offer Discounts to Boost Orders Amid Capacity Utilization Decline

According to a report by Taiwan's Central News Agency, IC design manufacturers have stated that wafer foundry prices have not decreased. However, manufacturers are offering discount packages that effectively lower prices, with the discount amount depending on the volume of wafers ordered.

To boost customer orders, media reports suggest that manufacturers like United Microelectronics Corp (UMC) have implemented a "talk to us about pricing" strategy, where customers can negotiate discounts of up to 10-20% if they are willing to order more wafers than before. This is a greater discount than what was previously offered.

Previously, wafer foundry manufacturers revealed that recent cancellations by customers have caused a large drop in capacity utilization. However, the strengths of these manufacturers differ, and so do their pricing strategies. Samsung, Powerchip, and GlobalFoundries have directly lowered prices, while TSMC, UMC, and Vanguard International Semiconductor have not changed their pricing publicly, but are offering discounts privately based on the size of the customer's order.

Manufacturers have said that TSMC, UMC, and Vanguard have chosen to privately coordinate wafer prices with customers in order to maintain their hard-won ASP and gross margin increases. They expect wafer foundry prices to remain stable throughout the year, with operations being low in the first half of the year and picking up later. UMC has estimated that customer inventory levels should bottom out in the first quarter of 2023, with a chance of a slow recovery in the second quarter. UMC has offered customers a discount package for Q2 wafer orders, with the discount amount increasing the more wafers the customer orders, with an average discount of 10-15%. Vanguard is increasing the number of free wafers for its customers.