Chinese semiconductor makers initiate price-cutting race

The latest report from TrendForce shows that, based on the complex nature of lithography techniques, Taiwanese, American and Korean semiconductor companies are now forced to compete with Chinese companies for customers.

A series of semiconductor manufacturers cut prices to attract customers.

The source noted that Chinese companies including SMIC, Huahong Group, and Nexchip have cut prices for their contract manufacturing services over the past year and have been picking Taiwanese chipmakers as potential customers. As a result, Taiwanese developers have ended up terminating contracts with Samsung, GlobalFoundries, UMC, and PSMC to switch to Chinese rivals.

This has prompted Taiwanese contract semiconductor manufacturers, represented by UMC and PSMC, to lower their service prices to better compete with their Chinese rivals. While UMC has reduced its standard 300mm silicon wafer processing prices by 10-15%, the price cut for the 200mm wafer segment is 20%, with the new prices taking effect in the fourth quarter of 2023. Note that last year, Chinese contract manufacturers implemented more radical price cuts, in the range of 20-30% depending on the size of the wafer and the scope of the proposed technical process.

Samsung is not out of the trend and in the first quarter of this year, customers not only get a 5-15% discount but also have the opportunity to negotiate further discounts. According to TrendForce, last year, Taiwan accounted for 46% of semiconductor production capacity, China ranked second with 26%, South Korea ranked third with 12%, the US accounted for 6% and Japan only at 2%. All of these countries and territories are determined to actively expand semiconductor production on their territories. Experts predict that by 2027, the balance of power in the market will change when Taiwan retains only 41% of capacity and South Korea only 10%.

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