UMC's foundry price increased by 15% in July! MCU giant Holtek announced that it would suspend orders

On April 22, according to Taiwan media reports, several IC design companies broke the news on the 21st that they had received a notice from UMC that it had initiated a new wave of price increases. The price of wafers produced in July will be increased by 15%. At the same time, UMC predicted that prices will rise again in the fourth quarter.

IC industry insiders revealed that UMC notified its customers at the end of last year that the quotation for 8-inch wafer output would increase by 10% at the beginning of this year, and announced a new pricing strategy in early April this year. Among them, 8-inch wafer foundry would increase by another 10%, and 12-inch wafer prices would be adjusted for the first time, with an increase of 10%.

As customer demand continues to be strong, wafer foundry capacity is in short supply. Several IC design companies revealed that they had received the latest notice from UMC yesterday that the prices of mass production shipments in July will be increased by 15% for both 8-inch and 12-inch wafers.

So far this year, the cumulative increase in UMC's 8-inch and 12-inch wafer foundry prices has reached 39% and 26% respectively. IC design industry insiders pointed out that UMC also announced that prices will be adjusted again in the fourth quarter. Based on this estimate, the price increase of 8-inch wafer foundry will definitely exceed 50% throughout the year, and the increase of 12-inch will also exceed 30%. UMC is really going to "make a fortune".

Another IC design company privately revealed that UMC's wafer foundry costs will continue to rise until next year.

Although UMC has been raising its quotations, TSMC has not yet changed its prices (it is estimated that it has no capacity to accept orders, and previously revealed that its capacity has been scheduled until 2022). Some of UMC's foundry prices have exceeded TSMC's. The industry expects that this will drive a new round of price increases for chip manufacturers, and downstream OEM/ODM manufacturers will continue to be shrouded in the shadow of material shortages and price increases.

Regarding the rumors of price increases, UMC said yesterday that it would not respond to price issues and that relevant industry trends would be explained to the public at the legal briefing on the 28th.

Against the backdrop of a new round of price increases by upstream foundries, Taiwan's MCU giant Holtek Semiconductor issued a notice to its customers on April 21, announcing that "orders with delivery dates in 2022 will be temporarily suspended from today." For orders for which deposits have been received in 2022, the delivery date will be rescheduled based on the number of wafers to be produced.

As for the reason for the suspension of orders, Holtek released a notice showing that wafer fabs and packaging plants have notified that there will be another wave of price increases in the near future, with a price increase of 15%-30%. It is expected that wafer fabs will provide the number of wafers to be produced in 2022 in early May, and the 2022 order rules will be announced after confirmation.

Holtek expects to resume accepting orders for 2022 before mid-May. After the 2022 masking capacity is fully filled, orders will be suspended. For orders with a delivery date of 2023, it is expected that orders will be accepted only after the wafer fab provides 2023 production capacity in May 2022.

Due to the continued shortage of 8-inch wafer foundry capacity and the continued increase in foundry fees, downstream related chips have experienced widespread shortages and skyrocketing prices, among which MCU chips, which have huge market demand, have become the hardest hit.

On February 1 this year, Holtek announced that the price of all products would increase by 15% starting from April 1. This was the first time in Holtek's history that prices of all products increased. It was also the second round of price increases initiated by Holtek after the 10% increase of some products in November last year.

Cai Rongzong, deputy general manager of Holtek's business marketing center, said that the price increase is to cope with the cost increase caused by the two waves of price increases that will be launched by wafer foundries, and to actively strive for production capacity.

At that time, Cai Rongzong also revealed that according to the production capacity in the first half of the year, the current orders are fully loaded. In order to ensure the material conditions, some customers even prepaid 30% of the deposit and placed orders until 2022. This also shows the shortage of MCU production capacity.

As a major global producer of 8-inch wafers, this new round of price increases for UMC's 8-inch and 12-inch wafer foundry services will inevitably have a direct impact on the costs of downstream chip design manufacturers.

It is reported that Holtek's products are mainly manufactured by UMC, mainly in 8-inch wafer production capacity. In terms of 8-inch wafer production capacity, UMC, TSMC and World Advanced are the main players in the world's 8-inch wafer production capacity, among which UMC's production capacity accounts for more than 50% of the total 8-inch wafer production capacity.

In addition, the packaging and testing factories are also continuously raising prices. Previously, the packaging and testing giant ASE announced that it would increase the average order price of packaging and testing by 5-10% in the first quarter of 2021. And it will increase by about 10% every quarter thereafter.

Against this background, it is not difficult to understand why Holtek announced the suspension of orders, and after confirming that the wafer factory can provide the number of wafers to be produced in 2022, it will adjust the order rules for 2022 and resume accepting orders.

In addition to Holtek, several MCU manufacturers have recently announced the suspension of orders and price increases.