South Korean 8-Inch Wafer Foundries Cut Prices Up to 10%
In recent developments, prominent semiconductor foundries such as Taiwan Semiconductor Manufacturing Company (TSMC), United Microelectronics Corporation (UMC), GlobalFoundries, and Powerchip have embarked on a trajectory of price reductions and introduced diverse profit-sharing models. Reports from industry insiders in South Korea on November 29th reveal that 8-inch wafer foundries in Korea have initiated price reductions, with some entities implementing cuts of up to 10%. This strategic move is positioned to enhance competitiveness vis-a-vis counterparts in the Greater China region.
A representative from a South Korean fabless semiconductor enterprise highlighted that the acceptance of price reductions by Korean foundry companies is crucial to avoid potential failure within the domestic semiconductor industry. Simultaneously, concerns have been raised regarding the burgeoning demand for Artificial Intelligence (AI), although the quantifiable impact on revenue remains uncertain.
Industry projections indicate an escalation in the trend of price reductions within South Korean wafer foundries, essential for maintaining optimal capacity utilization. The semiconductor landscape in Korea and globally faces challenges due to increased 8-inch wafer foundry capacity in the Greater China region, coupled with diminishing consumer demand and a deceleration in the growth of the fabless semiconductor industry. Notably, the electric vehicle sector has experienced a contraction in demand, resulting in the complete cessation of semiconductor production for some automotive applications.
As the entire fabless semiconductor industry advocates for price reductions from foundries, the profitability of wafer foundry enterprises is anticipated to further deteriorate, with projections indicating a potential decline in sales by the year 2024.
Key players in South Korea's 8-inch wafer foundry sector include Samsung Electronics, DB HiTek, Key Foundry, Magna Chip, and others. Industry experts foresee a potential recovery in the wafer foundry sector not materializing until the latter half of 2024.
