Historically, according to the laws of market development, whenever supply exceeds demand, prices will basically rise all the way. Just like during the SARS period, the supply of the "panacea" Isatis root exceeded the demand, and the price at that time rose from a few yuan to as high as 50 yuan. Today, chips are also in short supply globally. The rise in OEM prices has increasingly become a common occurrence.
After TSMC’s several price increases, another wafer foundry United Microelectronics could no longer sit still. Not only did it also start to increase prices, it even matched TSMC’s price increases. So, will UMC's price increase in chip foundry affect its own consumer market in mature process chips? With the same price increase, in the field of mature process chips, in the future, who will be better, UMC or TSMC?
Keeping up with TSMC, UMC raises chip foundry prices
TSMC can now be said to be a big success and is facing very fierce competition. In the field of high-end advanced process chips, there are the well-known Samsung and Intel . In the field of mature process chips, there are SMIC in mainland my country, and of course, there is UMC in Taiwan.
Speaking of UMC, this company always feels a bit unique because it cannot keep up with TSMC and Samsung in terms of advanced process chip technology. Therefore, as early as August 2018, UMC announced its withdrawal from advanced processes and focused on mature processes, becoming a global leader. The first company to exit the advanced chip track. In May this year, TSMC notified its customers that next year, in 2023, it will comprehensively increase the foundry prices of all chips, including mature process chips, by up to 6%.
For now, this is the third time that TSMC has raised chip foundry prices. When TSMC has raised prices several times, UMC has also taken action. my country's Taiwanese media "Electronic Times" reported that according to relevant sources, UMC is currently negotiating with customers and also wants to increase the foundry price of mature process chips. As for the increase, it is the same as TSMC, which is 6%.
TSMC, as a global chip foundry giant, has strength, a market, and the confidence to raise prices. Although UMC's strength is not weak, it has not yet reached the point of being the only one in the world. So, will UMC's current price increase be the same as that of TSMC, will it affect the consumer market for UMC's mature process chips?
Will this move affect UMC’s consumer market in mature manufacturing processes?
In fact, UMC's price increase should not affect its consumer market. Now, May 2022 has just passed, so how was UMC's performance in May this year? In fact, it is not bad. According to UMC's economic revenue in May this year, UMC achieved total revenue of NT$24.433 billion in May 2022, a month-on-month increase of 7.18 and a year-on-year increase of 42.14%. It has been 8 consecutive months of revenue. All hit record highs.
It can be seen that UMC's current revenue performance is actually quite impressive, and the outstanding revenue performance is actually behind its vast consumer market and its extremely high market recognition. Therefore, since UMC itself has a good market foundation, UMC's price increase should not affect the consumer market for UMC's mature process chip foundry.
In addition, according to relevant news, the employee attendance rate of UMC Suzhou and the shipyard is now as high as 98%. Such nearly full-time employees are on duty, which will undoubtedly bring great guarantee to UMC's production capacity. As long as UMC's mature chip production capacity will not decline, as the global demand for mature process chips is strong, especially at a time when global chip foundry prices are generally rising, UMC's price increases should not have an impact on its own consumer market.
Therefore, UMC’s price increase should not affect the UMC consumer market. However, with the same price increase, can UMC beat TSMC in the field of mature process chip foundry?
also has the same price increase and the same manufacturing process. Can UMC beat TSMC?
With mature process chip foundry prices also rising, it may not be so easy for UMC to win over TSMC. First of all, it is true that UMC's mature chip foundry production capacity is guaranteed, but TSMC not only has guaranteed production capacity, but is even continuing to develop and progress.
On November 9, 2021, TSMC publicly stated that in order to meet market demand, it will build a 7-nanometer and 28-nanometer wafer plant in Kaohsiung, Taiwan, and is expected to break ground in 2022. Mass production will begin in 2024. In addition, this year, that is, 2022, TSMC also plans to invest billions of dollars to build an identical factory in Singapore .
It seems that TSMC is now also heavily deploying and vigorously enhancing its mature process chip foundry production capacity. Under the current situation, it is estimated that it will be difficult for UMC to win over TSMC.
In addition, the current yield rate of TSMC chips is still very high. Taking 4-nanometer chips as an example, TSMC's yield rate can be as high as more than 70%, which is globally recognized. TSMC can achieve a yield rate as high as 70% in high-end advanced processes such as 4 nanometers, let alone mature processes.
Therefore, under the premise that the yield rate of TSMC’s mature process chips should also be very high, it is probably not that easy for UMC to win over TSMC.
summary
The price increase of mature process chip foundry has followed that of TSMC, and UMC has finally increased its price. Of course, UMC's price increase may not affect or impact its own market in this field. As for surpassing TSMC in this field, it is estimated that there is still a long way to go for UMC.
