Samsung Q1: 5%-15% Drop in Semiconductor Foundry Prices
In recent market developments, reports have surfaced regarding Samsung's adjustment of wafer foundry prices in the first quarter, reflecting a reduction ranging from 5% to 15% across various processes. This strategic move aims to secure customer orders and enhance production capacity utilization.
Analysis by industry experts attributes Samsung's price adjustment primarily to subdued market demand, prompting the company to engage in competitive pricing to attract clients, particularly against TSMC for advanced process clientele. Notably, the repercussions of Samsung's price cuts are anticipated to exert pressure on UMC, GlobalFoundries, and other Taiwanese manufacturers.
Insiders emphasize the persisting challenges in the global consumer electronics sector, with wafer foundry factories experiencing weakened order volumes. Last year, several South Korean wafer foundry manufacturers adopted a "Warm Shutdown" strategy to navigate challenging industry conditions.
Conversely, TSMC, while maintaining stable pricing, has been reported to offer selective discounts on mask costs for mature processes towards the end of 2023. Simultaneously, efforts to incentivize customers to initiate production of new products have been observed. In the realm of the 7nm process, characterized by lower capacity utilization rates, discounts are determined based on the customer's order volume.
Moreover, companies like UMC, GlobalFoundries, and Powerchip, focusing on mature processes, purportedly implemented double-digit percentage price reductions in the first quarter of this year. The reduction for project customers reportedly reached a notable range of 15% to 20%.
The current outlook for the semiconductor market underscores the ongoing need for recovery. Analysts from research firm Omdia project that the integration of AI features into smartphones and PCs, coupled with increased investments in generative AI, will significantly bolster the semiconductor market. A rebound in global semiconductor demand is anticipated in the second quarter.
