Big price cut for wafer foundry? Samsung launches price war!

According to the Taiwan Economic Daily, Samsung is reported to have launched a wafer foundry price war to seize orders, locking in mature processes, and cutting prices by up to 10%. Samsung is coming fiercely, and UMC and World Advanced have also begun to cut prices for customers if they can.

The latest survey by TrendForce, a technology market research organization, shows that as of the end of the third quarter of last year, Samsung’s wafer foundry global market share was 15.5%, ranking second, although it was significantly behind the leading TSMC (market share of 56.1%) ), but it is already close to the sum of the three companies, UMC, GlobalFoundries, and SMIC, which ranks third to fifth, and still has a very benchmark status.

Previously, Korean media reported that in response to the downturn in the semiconductor market, Samsung's foundry business adopted a strategy of "attacking high-end (processes) and abandoning mature (processes)", transferring mature process production line personnel to high-end processes, and sprinting towards 3-nanometer production. It even hesitated to abandon mature process customers, but Samsung later denied it by issuing a statement, emphasizing that mature processes are also indispensable to the company's foundry business and will continue to find ways to meet customer needs.

Samsung recently admitted that industry inventory adjustments have led to a decline in the capacity utilization of its foundry business. It is reported in the industry that Samsung not only did not give up the business of mature wafer foundry processes, but also launched a more aggressive price war to grab orders in the face of declining production capacity utilization, hoping to use this to reverse the decline and bring more products at a lower price. Multiple orders fill capacity.

Supply chain analysis shows that Samsung's wafer foundry business originally focused on producing its own chips. However, with the current economic headwinds, Samsung's demand for its own chips has been simultaneously frustrated, and idle production capacity has increased significantly. In order to fill the vacancy in production capacity, it is inevitable to compete for orders at low prices. It is reported that Samsung has aggressively bargained for mature wafer foundry processes by as much as 10%, and has already won some orders from Taiwanese Netcom chip factories.

The supply chain pointed out that Samsung's wafer foundry's previous quotation was slightly lower than that of its peers. Now the overall market demand is still sluggish. If Samsung takes drastic measures again and slashes its quotation by 10%, it will inevitably become an obstacle for IC design factories to negotiate with other wafer foundries. According to this, if you don’t lower the price, I will switch production to Samsung, which will put pressure on the foundry industry.

Samsung's wafer foundry mature process price bargaining has caused waves in the industry. Taiwanese manufacturers such as UMC and Worldwide are reported to have begun to carry out price adjustment strategies with customers. In response, UMC responded that it would not comment on market rumors. At present, the quotations are stable.

UMC admitted frankly that order visibility is low at this stage, and this quarter is full of multiple challenges. The capacity utilization rate will drop sharply from 90% in the previous quarter to nearly 70%. Gross profit margins have plummeted in tandem with wafer shipments, and gross profit margins are even more likely to drop. It is a seven-quarter low. It is expected that as the industry continues to destock, demand is expected to gradually pick up in the second half of the year.