According to Taiwan's Economic Daily News, as the storm of price cuts on semiconductor chips expands, microcontrollers (MCUs) have started to see an avalanche of offers, and there is even news that the prices of products from the world's top five MCU manufacturers have been cut.

In fact, under the influence of factors such as the epidemic, the Russia-Ukraine conflict, and high inflation, many chip products on the market are currently experiencing varying degrees of price declines. For example, Global Semiconductor Watch previously mentioned in the article "Six types of chip prices continue to dip" that market research firm TrendForce Tibco expects NAND Flash prices to fall 0-5% and DRAM prices to fall 3-8% in the third quarter. According to the latest forecast of Tibco, DRAM prices will further expand to nearly 10%.

Market research firm TrendForce predicts that consumer MLCC prices will continue to fall 3-6% in the second half of the year, and NAND Flash prices will fall 0-5% in the third quarter; in addition, the third quarter DRAM price decline has been revised from the original forecast of 3%-8% to nearly 10%.

But at the same time, IGBT, power devices and other industrial, automotive high-end chip capacity is still in short supply, some chip product prices are also rising.

1 Automotive-grade chip prices soared, some products more than 10 times the ex-factory price

As we all know, the MCU application range is extremely wide, including consumer, industrial, automotive many aspects. For the news of the MCU price plunge, according to the China Securities Journal, a domestic first-line MCU executives said to it, certain areas of application is affected by the normal, fermentation to the whole field is not objective. The executive further explained that many fields such as industry continue to maintain a robust and steady development momentum.

Some industry insiders believe that despite the volatility of consumer MCU products such as cell phones, the industrial control and automotive markets are actually still growing and not weakening, and demand is still outstripping supply.

In the past two years, there has been a serious shortage of automotive chips. In the case of capacity shortage, the price of automotive chips has skyrocketed, and the chips originally priced at a few dollars have been speculated to several thousand dollars. Cai Yi, director of Changan Automobile's East China war zone, said at the beginning of this year that the average price of chips used in the automotive industry had increased by as much as 20 times in the current round of "core shortage".

As reported by Science and Technology Board Daily at the end of last month, some products still maintain a high price of more than 10 times the factory price in the market due to the "hard to find" of automotive grade chips.

In the second quarter of this year, STMicroelectronics, the world's fourth-ranked MCU manufacturer, once again raised the prices of all product lines, including MCU, power management chips. For the reasons for the price increase, STMicroelectronics said the continued global shortage of semiconductors, as well as the economic and geopolitical situation has seriously affected the industry, with no signs of recovery in the short term.

Mercedes-Benz CEO believes that the global shortage of semiconductor chips will continue this year until 2023. Hua Hong Semiconductor also expects that the global imbalance between supply and demand for semiconductors and chips will continue beyond 2022, especially in the automotive electronics sector.

Global production capacity is still to be eased, the major foundries and silicon manufacturers and "non-stop" to open a new round of price increases.

2 Foundry manufacturers increased costs, TSMC / Samsung and other price increases again

According to recent media reports in Taiwan, TSMC, the leading foundry, has informed customers that it will raise the foundry prices since January 2023, most of the process price increase of 6%. According to the report, some TSMC customers confirmed that they have been notified of the price increase, including advanced process increases of 7-9%.

It is worth mentioning that this is TSMC's second price hike in less than a year's time. Last August, TSMC issued a notice that due to rising raw material prices, chip capacity shortages and other factors, plans to increase foundry prices in 2022, including advanced process price increases of about 10%, mature process price increases in about 10-20%.

In addition to TSMC, in the semiconductor silicon materials and other raw materials prices, driven by Samsung, UMC and other head foundry manufacturers have also opened a new round of price increases.

According to Bloomberg, Samsung is expected to increase foundry prices by 15-20% in 2022, depending on the process, and the new pricing will be implemented in the second half of the year. As for UMC, according to industry sources, UMC intends to raise its offer for 22/28nm and other popular processes in 2023 by about 6%.

In addition, SMIC co-CEO Navy Zhao previously revealed at the first quarter earnings presentation that SMIC is also negotiating price increases with its customers. However, unlike its peers, SMIC did not announce that it would increase prices uniformly. Zhao Navy said that SMIC's principle is still to negotiate with customers in a friendly manner and then consider long-term strategic cooperation.

Unlike the extreme oversupply price increase in 2021, the current round of price increases are mainly due to capital expenditure considerations of foundry manufacturers for plant construction and expansion, as well as concerns about high inflation leading to rising raw material costs.

3 Semiconductor wafer market demand soaring, win high / global wafer capacity sold out

According to SEMI estimates, from 2020 to 2024, the world will add more than 30 new 300mm chip manufacturing plants. There is no doubt that, as the key core material for making chips, with the successive commissioning of new factories, semiconductor silicon wafer demand will also be further enhanced.

Since 2016, semiconductor wafer prices have shown a significant increase, from $0.67/square inch to $0.98/square inch in 2021. And in recent years, prices have risen even further as the downstream market continues to grow. Since this year, international semiconductor wafer manufacturers have been repeatedly rumored to increase prices.

According to a recent report by Bloomberg, Japan's Showa Denko, which supplies key chip materials to TSMC, Infineon and other companies, is expected to raise prices further and cut unprofitable product lines in response to a series of economic challenges facing the $550 billion semiconductor industry.

This comes on top of at least 12 rate hikes that have already occurred globally this year, reflecting the impact of supply disruptions caused by the new crown epidemic, soaring energy costs and a sharp depreciation of the yen, said Hideki Somemiya, the company's chief financial officer. Hideki Somemiya believes the situation is unlikely to improve significantly until at least 2023.

On April 11, Shin-Etsu Chemical, the world's largest semiconductor wafer company, announced another price increase for all silicone products used in semiconductors and electric vehicles. Starting in May 2022, the prices of all silicone products shipped by Shin-Etsu Chemical will increase by 10%.

In addition, another Japanese semiconductor wafer manufacturer Katsushika has also confirmed the news that prices will increase for orders renewed this year, Katsushika President and CEO Masayuki Hashimoto has revealed that "due to the year-on-year expansion of semiconductor market demand, all types of semiconductor wafer production capacity continues to show a tight state, Katsushika's production capacity has been full until 2026.

As reported by Nikkei Asia earlier this month, Katsunaka plans to increase the price of long-term contracts for chipmakers by about 30% in 2022-2024.

As for Global Wafer, the company's 2022-2024 capacity has been sold out, and even more than 80% of the capacity of its new Texas plant, which has not yet been completed, has been booked by customers.

According to Global Wafer Chairman Hsu Hsiu-lan, all of the company's long-term customers have seen their wafer supply contract prices rise, he said at the June 21 shareholders' meeting, adding that the latest long term contracts signed are now higher than two months ago, and that long term contract prices continue to rise, and will rise next year and the year after.