The mature process of traditional wafer foundry is reduced by up to 20%!

According to Taiwanese media Economic Daily News, the industry reported that due to the fact that the increase in capacity utilization rate is not as expected, UMC, PSMC, World Advanced and other wafer foundries have launched the strategy of "as long as you come to put into wafers, the price can be negotiated". If customers are willing If you place more orders, the price discount can reach 10% to 20%, which is more than the previous price reduction.

Previously, in response to the downturn in the market, Samsung reported a 10% price cut for mature manufacturing processes to grab orders. Now Taiwanese factories are cutting prices even more in order to fill production capacity. In order to increase capacity utilization, wafer foundries will not hesitate to expand price cuts, which will affect the subsequent trend of gross profit margin and average unit price (ASP).

Regarding the discount of 10% to 20% on the mature process of the foundry in exchange for customer orders, the leading TSMC stated that it does not comment on any customer business or market rumors; UMC, PSMC, and world advanced also did not respond to price issues.

Zhao Haijun, co-CEO of SMIC, also mentioned the current market price situation at the performance briefing. He said that judging from the communication with customers, although orders are expected to resume in the second half of this year. However, due to the new production capacity in the market in the past two years, the overall price may not rise back to the same period in the same period. "We need to make products and technologies more competitive, bind them more firmly with end customers, and stop entering into low-end price competition."

However, a number of IC design factories pointed out that there is no price reduction in the quotations of Taiwan-based foundries, but they are only offering preferential plans for customers who cooperate with pre-production and stocking, which is equivalent to a price reduction in disguise, and the discount rate depends on the production volume.

The 8-inch plant is the most affected, with a capacity utilization rate of only 50%

Although some IC design factories have recently received urgent orders, the industry privately admits that the scale of urgent orders is not large, and most of them are only about 10% to 20% of the normal orders in the past, which is very limited to fill the capacity utilization of wafer foundries. In order to attract customers to place more orders, the foundry industry voluntarily proposed the condition of "large quantity and price negotiable" and beckoned to customers.

According to a person from an investment institution in Shanghai: "The overall situation of consumer electronics is very poor now, and production capacity is not as tight as before. Several large consumer electronics chip companies have not even placed orders with fabs recently."

According to the industry, under the influence of weak market demand and the traditional off-season, mature processes, especially 8-inch fabs, have the greatest impact. The main reason is that the recovery of consumer electronics is not clear. Therefore, power management ICs, which are mainly produced in mature processes in 8-inch fabs, For driver ICs, fingerprint recognition ICs, power components, etc., due to the repeated orders placed last year and the current high inventory status, the capacity utilization rate of 8-inch factories in the industry is generally only about 50% to 60% in the first quarter.

When will the order pick up? According to TrendForce's research report, the recent 8-inch fab order replenishment phenomenon will occur sporadically in the second quarter of 2023, mainly due to the demand for special industrial computers and the conversion of a small number of customers to the proportion of production between wafer foundries. The contribution of the overall 8-inch capacity utilization rate is still limited, but the capacity utilization rate will be similar to the first quarter, and there is no obvious sign of recovery.

For the 12-inch plant, the price drop is relatively small because the supporting facilities can support the production capacity of advanced processes, the machines can be deployed, and there are still demand supports for vehicles and 5G communications.

According to the industry, mature foundry manufacturers are currently aiming to increase the utilization rate of production capacity. Now if the client has a "big order", the room for bargaining is more flexible than before, and the price discount ranges from 10 to 20 percent. . But is the big price cut strategy working? Depending on the degree of recovery of terminal demand, otherwise customers do not want to spend more money to accumulate inventory

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The mature process of traditional wafer foundry is reduced by up to 20%!

The 8-inch plant is the most affected, with a capacity utilization rate of only 50%