Expecting 10% Drop in Mature Process Wafer Prices

According to recent reports from Taiwanese media outlets, the demand for mature process wafers in the initial half of this year remains subdued. During the first quarter, pricing for mature process wafer foundries experienced a decrease in single-digit percentages (ranging from 4% to 6%). This decline is anticipated to persist into the second quarter, driven by the ongoing expansion of mature process capacity in mainland China, resulting in an estimated cumulative reduction of approximately 10% for the first half of the year.

There's been a notable shift observed among chip design firms, particularly in the driver chip segment, with some gradually transitioning their orders from mainland wafer foundries to other sources. Presently, there exists a significant price differential of approximately 20% to 30% between wafer foundries across the Taiwan Strait.

Regarding the recent wave of price adjustments in mature process wafer foundries, senior executives within the IC design industry have reported a decline in Taiwanese wafer fabs by at least single-digit percentages (ranging from 1% to 3%), while mainland manufacturers have witnessed a reduction in mid-single-digit percentages (ranging from 4% to 6%). Larger order volumes have the potential to further negotiate prices downwards or explore alternative discount arrangements.

The continuous expansion of mature process capacity in mainland wafer foundries, coupled with various subsidies, has introduced significant flexibility in pricing strategies. As long as clients commit to substantial order quantities, negotiated prices can exceed variable costs. This suggests that there remains room for continued price adjustments in mature process wafer foundry quotes throughout the second quarter.

In terms of specific processes, chip design firms highlight an ongoing undersupply scenario for the high-voltage 28nm process, with potential price escalations. However, for the 40nm and 55nm processes, where capacity expansion outpaces demand recovery, price reductions are the prevailing trend.

While mainland China adopts an aggressive price reduction stance, wafer foundry prices in Taiwan exhibit relative stability. Notably, TSMC emphasizes its strategic stance against engaging in price wars, instead focusing on cultivating opportunities with European and American clients to maintain moderate growth throughout the year.