Wafer foundries start a new round of price increases? TSMC, Samsung and UMC Spread the news of price rises

　　In May, the world's top ten foundries included TSMC, Samsung, and UMC. Spread the news of price rises.

　　TSMC: It is rumored that the foundry price will be raised by 5-8% across the board

　　According to foreign media reports, TSMC held an order meeting with customers in advance for 2023 on May 10, and informed that from January 2023, it will comprehensively increase the price of advanced and mature process OEMs again. According to different customers, products and order sizes, the increase About 5-8%.

　　The report quoted people familiar with the matter as saying that TSMC’s price hike was due to pressure from inflation concerns, rising costs, and its own large-scale production expansion plans. TSMC hopes to use this to help alleviate the problem of global supply shortages.

　　Supply chain news shows that this is TSMC's second price increase in half a year. In August 2021, TSMC announced a price increase across the board, of which the price of advanced processes will increase by about 10%, and the price of mature processes will increase by about 10-20%. It is reported that this is the largest price increase by TSMC in a decade. At that time, TSMC also stated that it would stop its quarterly price reduction for IC design customers after the products of its IC design customers entered mass production and the process went smoothly.

　　TSMC made public its massive expansion plans last year, with officials saying it would spend $100 billion to increase capacity by 2023. The plan will cost $40 billion to $44 billion in capital expenditures this year alone.

　　The smooth implementation of the expansion plan comes from good earnings and positive judgment on future revenue expectations. According to TSMC’s Q1 quarterly financial report, revenue was NT$491 billion (approximately US$17.57 billion), an increase of 36.0% from the same period in 2021 and an increase of 11.6% from the previous quarter. Due to cost improvement, TSMC's gross profit margin in the first quarter reached 55.6%, up 2.9 percentage points from the previous quarter.

　　Wei Zhejia, president of TSMC, said at the corporate briefing in April that production capacity will remain tight this year and will not lower OEM prices. TSMC believes that the long-term gross profit margin of 53% or more can be achieved.

　　Samsung: The overall price increase may reach 15-20%

　　According to "Bloomberg" reports, Samsung is currently negotiating with customers and is expected to increase the price of foundry fees by 20% in 2022 to cope with rising material and logistics costs.

　　Bloomberg reported that the overall price increase is about 15-20%, depending on the complexity of the foundry chips, and the traditional process chips will increase even more. The new pricing will be implemented from the second half of this year, and Samsung has completed consultations with some customers but is still in discussions with others.

　　Samsung declined to comment on the price increase.

　　Last year, Samsung has maintained a relatively stable pricing strategy. Amid high inflation and rising raw material costs this year, its foundry prices are expected to rise.

　　It is reported that Samsung's foundry business hit a new high this year. According to Samsung Electronics' latest financial report, Samsung's Q1 revenue was 77.78 trillion won (about 61.38 billion U.S. dollars), an increase of 19% from 65.39 trillion won in the same period last year. Among them, the semiconductor (DS) division, which is responsible for the chip business, had a revenue of 26.87 trillion won (about 21.20 billion U.S. dollars) in the first quarter, a year-on-year increase of 39%; while its operating profit was 8.45 trillion won (about 6.67 billion U.S. dollars), a year-on-year increase. An increase of 151.5%.

　　In this regard, Kang Moon-sooo, Samsung senior vice president and head of the foundry market and strategy team, said on the company's first-quarter earnings conference call that Samsung's chip foundry business will continue to improve in the next few years. "If you look at our orders for the next five years, the total order book is about eight times our revenue in the previous year," added Kang Moon-soo.

　　UMC: The price increase is about 4%

　　In addition, industry news shows that UMC, another major wafer foundry, also plans to conduct a new round of price increases in the second quarter of 2022, with a price increase of about 4%.

　　At the legal meeting at the end of April, Wang Shi, general manager of UMC, once said that UMC's capacity utilization rate will reach 100% full load in the first quarter of 2022, and it is expected that it will continue to maintain 100% in the second quarter, and the overall production capacity will increase by about 4.5% quarterly. . The average selling price of products increased by 3% to 4%, and the gross profit margin reached 45%.

　　UMC has gradually raised prices since 2021. According to previous reports from Taiwan media, in November 2021, UMC said that it will increase the quotation for long-term customers, which will take effect from January 2022. At the end of December 2021, UMC once again issued a price increase notice, and from March 2022, it will increase the foundry quotation of all products by about 5-10%.

　　UMC recently announced its Q1 quarterly earnings. According to the financial report, UMC’s revenue in the first quarter was NT$63.42 billion (about US$2.22 billion), an increase of 34.7% year-on-year and 7.3% month-on-month; net profit attributable to the parent company was NT$19.81 billion (about US$692 million); operating profit The gross profit rate increased by 4.3 percentage points quarterly to 43.4%, an increase of 16.9 percentage points over the same period last year.

　　UMC pointed out that although the demand for specific applications such as PC, NB, and smartphones has weakened, the demand for automotive, industrial, Netcom, and cloud computing is still tight. It is expected that the growth of wafer foundries will exceed 20% this year.

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