(News) Semiconductor mature process prices fall due to sluggish demand, possibly falling in the second quarter

According to a report in Economic Daily, Taiwan’s semiconductor foundries are facing price pressure in the maturation process as demand remains weak. Officials said local foundries were offering discounts on mature process orders in the fourth quarter, marking a change from the relatively stable pricing seen in the third quarter. Prices may continue to fall into the first quarter of next year, marking the second consecutive quarter of downward pressure.

United Microelectronics Corp. (UMC), Vanguard International Semiconductor Corp. (VIS), and Powerchip Semiconductor Manufacturing Corp. (PSMC) are key players in Taiwan’s mature process foundry sector. UMC told Economic Daily News that prices were stable in the third quarter and that fourth quarter details will be disclosed in its next earnings release. Vanguard also said it will disclose its fourth-quarter guidance when it releases earnings.

The report noted that VIS had previously indicated that the competitive pricing environment would ease this quarter and occupancy would improve to around 70% or above. The company expects occupancy to rise to 70% to 80% next year, but reaching that ceiling will depend on demand.

However, price pressure in Taiwan’s mature foundry process is mainly due to weak demand for power management ICs and driver ICs, with some prices expected to decline by single-digit percentages over two quarters. Notably, Chinese foundries, which have been aggressive in lowering prices in the past, have held firm this time, in contrast to the more flexible pricing strategies of Taiwanese foundries.

Anonymous sources in the driver IC industry cited by Economic Daily said some Taiwanese foundries were willing to accept single-digit percent price cuts in the fourth quarter to maintain capacity utilization, while Chinese foundries There seems to be little appetite for lowering prices.

Another industry source analyzed that Chinese foundries’ reluctance to lower prices was due to improved utilization rates and the fact that previous price cuts had already created a large difference in pricing with Taiwanese competitors.

According to the report, negotiations are underway over pricing for mature processes, with volume playing a key role in securing discounts. Some microcontroller unit (MCU) manufacturers have revealed that certain foundries are offering single-digit percentage project-based discounts on bulk orders while keeping base prices unchanged in the fourth quarter.

The industry is currently negotiating prices for the first quarter of next year, and it is expected that some foundries may continue to lower prices, although not by a large margin.

(Photo provided by UMC)