Industry sources say it is becoming more difficult for IC design companies to raise their quotations

According to industry sources, IC design companies in Taiwan, especially those engaged in consumer IC design, are facing pressure to pass on costs as customers are increasingly unwilling to accept further price increases.

Digitimes reported that sources said IC design companies have raised their quotations for the third and fourth quarters of 2021 to reflect the increase in foundry and back-end costs, but it is difficult to raise quotations for the first quarter of 2022 due to the slowdown in terminal demand.

"End demand exploded between the second half of 2020 and the first half of 2021, with IC design companies offering higher prices to compete for more foundry capacity, while chip distributors raised prices to stockpile more inventory," the source said.

It is understood that automotive chips and power management ICs continue to face tight supply, which has caused IDMs such as Infineon, Renesas, Texas Instruments and STMicroelectronics and other related suppliers to increase the prices of the above two chips to compensate for the increase in production and raw material costs.

Sources pointed out that some consumer IC prices are beginning to face downward pressure. Although TSMC will increase its foundry quotation by 10-20% next year and other peers will follow suit, chip suppliers will find it increasingly difficult to raise their quotations in the first quarter of 2022.