[News] SMIC, Hua Hong Reportedly Pressure Taiwan Foundries with up to 40% Discount on Mature Nodes

As TSMC keeps making strides in advanced nodes, its Taiwanese foundry peers may be facing tough competition on mature nodes from Chinese rivals, including SMIC, Hua Hong Group, and Nexchip, as per Economic Daily News. The report indicates that recently, prices for 12-inch wafers from Chinese foundries have been slashed by as much as 40% compared to the offer from Taiwanese companies.

In addition to the rock-bottom price for 12-inch wafers mentioned above, major foundries in China are also offering an additional 20-30% discount on 8-inch wafers, as indicated by the report.

12-inch Wafer Prices Show the Most Significant Decline

According to the report, Chinese foundries are targeting deals for driver ICs, power management ICs, and MCUs, and they are offering varying discounts depending on the nodes or product types. The steepest price reductions are said to be seen in the 40/45nm nodes, with 12-inch wafer prices—which had previously held relatively firm—showing the most significant declines.

The move has reportedly triggered a wave of order transfers to China from Taiwan’s IC design clients, impacting Taiwanese foundries such as UMC and TSMC affiliate VIS, Economic Daily News notes.

Citing industry sources, the Economic Daily News report notes that during the COVID-19 pandemic, the demand for mature nodes surged. However, the landscape has completely shifted by now. In spite of the weak demand for mature nodes, Chinese foundries continue to ramp up new capacity, which leads to the severe oversupply in the market.

According to the analysis from TrendForce, Chinese foundries are set to drive the bulk of mature process capacity growth in 2025, thanks to the country’s domestic IC substitution policies. It is estimated that the capacity of the world’s top 10 mature process foundries will increase by 6% in 2025, though pricing pressures will persist.

TrendForce further notes that major capacity expansion plans for 2025 in China include SMIC’s fabs in Lingang (Shanghai), Beijing, HuaHong Group’s Fab9 and Fab10, and Nexchip’s N1A3.

China’s Nexchip Sees a Surge in Orders; UMC/ VIS Suffer

The report further indicates that the aggressive price cuts by Chinese foundries have started reaping the rewards. For instance, China’s Nexchip has reportedly seen a significant influx of orders for driver ICs and power management ICs in recent months.

The steep price reductions by Chinese foundries have become a bargaining tool for Taiwanese IC design companies, who are using these lower quotes to pressure Taiwanese foundries for discounts, as per the report. As a result, companies like UMC and VIS are facing mounting pricing pressures, leaving them with no choice but to follow suit, the report adds.

Analysts cited by the Economic Daily News point out that the Taiwanese foundries focused on mature nodes, such as UMC and VIS, have seen their capacity utilization rates drop below 70% lately. With Chinese competitors aggressively slashing prices to secure orders, the market is unlikely to recover until the second half of 2025, they said.

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(Photo credit: SMIC)