[News] Weak Demand Drags Down Semiconductor Mature Process Pricing, May Decline for Two Quarters

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Taiwanese semiconductor foundries are facing price pressure in mature process as demand remains sluggish, according to a report from the Economic Daily News. Sources indicate that local foundries are offering discounts on mature process orders in Q4, marking a shift from the relatively stable pricing seen in Q3. Prices could continue to decline into the first quarter of next year, marking two consecutive quarters of downward pressure.

United Microelectronics Corp. (UMC), Vanguard International Semiconductor Corp. (VIS), and Powerchip Semiconductor Manufacturing Corp. (PSMC) are the key players in Taiwan’s mature process foundry space. UMC told the Economic Daily News that its Q3 pricing remained stable, with Q4 details to be revealed in its next earnings call. Vanguard also said it would disclose its Q4 outlook during its earnings release.

The report notes that VIS previously indicated the competitive pricing environment would ease this quarter, with utilization rates improving to around 70% or higher. The company expects utilization rates to rise to 70-80% next year, though whether they reach the higher end will depend on demand.

However, the pricing pressure in Taiwan’s mature foundry processes stems largely from 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 had previously been aggressive in cutting prices, have held firm this time, contrasting with the more flexible pricing strategies of their Taiwanese counterparts.

An unnamed source in the driver IC industry cited by the Economic Daily News said that some Taiwanese foundries are willing to offer single-digit percentage price cuts in Q4 to maintain utilization rates, while Chinese foundries are less inclined to lower prices.

Another industry source attributed Chinese foundries’ reluctance to cut prices to improved utilization rates and the fact that previous rounds of price cuts had already created a significant gap between their pricing and that of Taiwanese competitors.

According to the report, negotiations over mature process pricing are ongoing, with volume playing a key role in securing discounts. Some microcontroller unit (MCU) makers revealed that certain foundries are offering project-based discounts of single-digit percentages for large orders in Q4, while keeping base prices steady.

The industry is currently negotiating pricing for the first quarter of next year, with expectations that some foundries may continue to lower prices, though likely not by a significant margin.

(Photo credit: UMC)