Taiwanese Foundries Unwilling to Lower Prices, Putting Pressure on IC Design Companies

According to a report by the Electronic Times, several IC design companies recently stated that Taiwan wafer foundries have no intention of lowering their prices, and that to obtain discounts, they must increase their orders or sign long-term contracts.

IC design companies stated that the price increases from suppliers from late 2022 to early 2023 will gradually reflect in their financial statements in the first half of 2023. They are still negotiating cost issues with upstream wafer foundries, but most results in insufficient order volume for discounts. Many suppliers hope to provide a certain period of cargo guarantee before they are willing to reduce prices.

Therefore, there is great pressure on IC design manufacturers, and currently, adjusting inventory and the scale of wafer production cannot be significantly increased in a short period. Related IC design manufacturers point out that the low willingness of wafer foundries to reduce prices is not surprising. After all, it took such a long time to finally wait for this opportunity, and it is not easy to abandon the bottom line of prices.

According to Taiwanese media reports, companies like UMC have provided a strategy of "as long as you order wafers, the price can be negotiated." If customers are willing to place more orders, the discount can be as high as 10-20%, which is larger than the previous price reduction.

Earlier, wafer foundries revealed that due to the cancellation of orders by customers, capacity utilization rate plummeted, and the price strategy of wafer foundries also varied. Samsung, Powerchip, and GlobalFoundries have directly lowered their prices, while TSMC, UMC, and Vanguard International Semiconductor have not changed their quotes but provided discounts based on the size of the customer's orders privately.