Monday, January 22nd 2024
Price War Reportedly Unfolds Between Foundries in China, Taiwan & South Korea
News reports from Asia point to an ongoing price battle between major chip foundries in the region—sluggish market conditions in 2023 have caused the big industry names to adjust charges, in concerted efforts to retain customers. This situation has escalated in early 2024—news media outlets claim that mainland China-situated factories have plenty of new production capacity, and are therefore eager to get their order books filled. The reports point to: "Semiconductor Manufacturing International Corporation (SMIC), Hua Hong Semiconductor and Jinghe Semiconductor lowering the price of tape-out services to chip design companies in Taiwan." Industry insiders believe that several Taiwanese IC designers have jumped onto better deals, as offered by Chinese facilities—it is alleged that Samsung, GlobalFoundries, UMC and Powerchip have all experienced a worrying increase in customer cancellations (at the tail end of 2023). The loss of long-term clients has forced manufacturers—in South Korea and Taiwan—into a price war.
TrendForce's analysis of market trends stated: "Due to the mature manufacturing processes in China, unaffected by US export restrictions, the lowered wafer fabrication costs have become attractive to Taiwanese IC design companies seeking to enhance their cost competitiveness. Reports also indicate that this competitive pressure has forced Taiwan's foundries, UMC and PSMC, to follow suit by reducing their prices. UMC has lowered its 12-inch wafer foundry services by an average of 10-15%, while its 8-inch wafer services have seen an average price reduction of 20%. These price adjustments took effect in the fourth quarter of 2023." Samsung is reportedly slashing prices by ~10-15%, and is expressing a "willingness to negotiate" with key clients in early 2024. Reports state this is a major change in attitude for the South Korean chip giant—allegedly, leadership was unwilling to budge on 2023 tape-out costs. TrendForce reckons that TSMC's response was a bit quicker: "(having) already initiated pricing concessions last year, mainly related to mask costs rather than wafer fabrication. It was reported that these concessions primarily applied to the 7 nm process and were dependent on order volumes."
Sources:
TrendForce, IJIWEI, Tom's Hardware
TrendForce's analysis of market trends stated: "Due to the mature manufacturing processes in China, unaffected by US export restrictions, the lowered wafer fabrication costs have become attractive to Taiwanese IC design companies seeking to enhance their cost competitiveness. Reports also indicate that this competitive pressure has forced Taiwan's foundries, UMC and PSMC, to follow suit by reducing their prices. UMC has lowered its 12-inch wafer foundry services by an average of 10-15%, while its 8-inch wafer services have seen an average price reduction of 20%. These price adjustments took effect in the fourth quarter of 2023." Samsung is reportedly slashing prices by ~10-15%, and is expressing a "willingness to negotiate" with key clients in early 2024. Reports state this is a major change in attitude for the South Korean chip giant—allegedly, leadership was unwilling to budge on 2023 tape-out costs. TrendForce reckons that TSMC's response was a bit quicker: "(having) already initiated pricing concessions last year, mainly related to mask costs rather than wafer fabrication. It was reported that these concessions primarily applied to the 7 nm process and were dependent on order volumes."
9 Comments on Price War Reportedly Unfolds Between Foundries in China, Taiwan & South Korea
A) Price wars = bad for those involved
B) China infiltrating yet another key industry = bad for everyone
Also, not sure what the unidentified fab photos are supposed to add to this posting, but they seem relatively small compared to some others I have seen :)
Furthermore: as developing countries like China (or even India) move into these lower-cost, lower-tech markets, we can expect chips based on 200mm technology to dramatically lower in price and get out-competed by lower labor costs. 300mm (aka: 12-inch) and other more recent technologies remain our strong-suit (and Taiwan's strong-suit).
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Modern chips drive modern economies. Not necessarily "the best chips", but you need the capability to design chips of all scales, even on older 200mm/8-inch technologies (180nm or 90nm nodes are equivalent to a Playstation 3 IIRC, still plenty usable for modern tech albeit at lower costs. Rasp. Pi 1 was somewhere around there as well (maybe two nodes up: 45nm) and that's plenty useful even today)
Just imagine a TV with a decent SOC and memory so the interface was smooth.
That's why we use Korean RAM, because Samsung RAM has more capacity at lower-prices than the competition. 200nm or other lower-tech fabs are best for microcontrollers and cheaper stuff (like ESP32, Orange Pi and the like). When you want absolute lowest-costs and are willing to accept worse performance-per-cost.
i still remember the days when Japan WAS a major chip foundry, seems to be and underdog these days
Japan's GDP has been steady for decades now, meaning its difficult for Japan to get money to invest into new technologies. Especially new tech that's in the $Billion class like chip manufacturing.