TSMC price increase puts pressure on design factories? Taiwanese media: Power IC and MCU are not a big problem

Rumors of TSMC's price increase continue to ferment, and previously UMC and others have also announced news of price increases, causing the industry to worry about the gross profit margins of downstream design factories. However, Taiwanese media analysis pointed out that the situation is different for different products. For example, there is no big problem for power management IC and MCU factories to pass on costs to downstream companies.

Juheng.com reported that some power management IC manufacturers have recently received price increase notices. The increased costs have been reflected to customers in new orders, and most of them can be fully passed on, reflecting that demand is still solid, and the gross profit margin in the second half of the year is expected to maintain the high level of the second quarter. In addition, considering the economic benefits, power management ICs are mostly produced in 8-inch wafers, and the industry expects that production capacity will still be tight by the end of next year.

The situation is similar for 8-inch MCUs. Some design houses still hold the initiative in bargaining, and the costs can still be passed on to customers. Most people in the industry believe that judging from the inventory of agents and clients, MCUs are still out of stock and there is still a trend of actively pulling goods. Unless the terminal sales situation changes significantly in the fourth quarter, the previous situation will not change before the end of the year.

In addition, large manufacturers such as MediaTek and Realtek will actually face cost pressure, but given their economies of scale, product lines and diverse customer base, they have more advantages than smaller manufacturers in terms of product portfolio and cost structure.

In general, most design houses said that it will take until the end of the third quarter or around the fourth quarter of this year to determine the actual demand and production capacity for next year, and prices will also be clearer, so that they can judge the gross profit margin.

Juheng.com quoted a senior executive of a design factory as saying that when the future is uncertain, the design factory will be brave enough to place orders, and the foundry will be brave enough to raise prices. In the second half of the year when the shortage is difficult to solve, customers still hope to build basic inventory before the end of the year, so the impact of the foundry price increase on the gross profit margin of the design factory in the fourth quarter is limited, and the pressure may not emerge until the first quarter of next year when the off-season begins.