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Price War Reportedly Unfolds Between Foundries in China, Taiwan & South Korea

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News reports from Asia point to an ongoing price battle between major chip foundries in the region—sluggish market conditions in 2023 have caused the big industry names to adjust charges, in concerted efforts to retain customers. This situation has escalated in early 2024—news media outlets claim that mainland China-situated factories have plenty of new production capacity, and are therefore eager to get their order books filled. The reports point to: "Semiconductor Manufacturing International Corporation (SMIC), Hua Hong Semiconductor and Jinghe Semiconductor lowering the price of tape-out services to chip design companies in Taiwan." Industry insiders believe that several Taiwanese IC designers have jumped onto better deals, as offered by Chinese facilities—it is alleged that Samsung, GlobalFoundries, UMC and Powerchip have all experienced a worrying increase in customer cancellations (at the tail end of 2023). The loss of long-term clients has forced manufacturers—in South Korea and Taiwan—into a price war.

TrendForce's analysis of market trends stated: "Due to the mature manufacturing processes in China, unaffected by US export restrictions, the lowered wafer fabrication costs have become attractive to Taiwanese IC design companies seeking to enhance their cost competitiveness. Reports also indicate that this competitive pressure has forced Taiwan's foundries, UMC and PSMC, to follow suit by reducing their prices. UMC has lowered its 12-inch wafer foundry services by an average of 10-15%, while its 8-inch wafer services have seen an average price reduction of 20%. These price adjustments took effect in the fourth quarter of 2023." Samsung is reportedly slashing prices by ~10-15%, and is expressing a "willingness to negotiate" with key clients in early 2024. Reports state this is a major change in attitude for the South Korean chip giant—allegedly, leadership was unwilling to budge on 2023 tape-out costs. TrendForce reckons that TSMC's response was a bit quicker: "(having) already initiated pricing concessions last year, mainly related to mask costs rather than wafer fabrication. It was reported that these concessions primarily applied to the 7 nm process and were dependent on order volumes."



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So to summarize:

A) Price wars = bad for those involved
B) China infiltrating yet another key industry = bad for everyone

Also, not sure what the unidentified fab photos are supposed to add to this posting, but they seem relatively small compared to some others I have seen :)
 
B) China infiltrating yet another key industry = bad for everyone

Lower-cost lower-tech 8-inch (aka 200mm wafers) is something an advanced economy like China will always be able to do, even without ASML or other Western-technologies.

Furthermore: as developing countries like China (or even India) move into these lower-cost, lower-tech markets, we can expect chips based on 200mm technology to dramatically lower in price and get out-competed by lower labor costs. 300mm (aka: 12-inch) and other more recent technologies remain our strong-suit (and Taiwan's strong-suit).

---------

Modern chips drive modern economies. Not necessarily "the best chips", but you need the capability to design chips of all scales, even on older 200mm/8-inch technologies (180nm or 90nm nodes are equivalent to a Playstation 3 IIRC, still plenty usable for modern tech albeit at lower costs. Rasp. Pi 1 was somewhere around there as well (maybe two nodes up: 45nm) and that's plenty useful even today)
 
if Chinese electronics manufacturers are smart they will make use of the glut and start offering devices with much more memory and make foreign counterparts look anaemic.
Just imagine a TV with a decent SOC and memory so the interface was smooth.
 
if Chinese electronics manufacturers are smart they will make use of the glut and start offering devices with much more memory and make foreign counterparts look anaemic.
Just imagine a TV with a decent SOC and memory so the interface was smooth.

You aren't going to beat the Korean 1x nanometer memory processes with 200mm wafers (aka: 45nm or worse process nodes).

That's why we use Korean RAM, because Samsung RAM has more capacity at lower-prices than the competition. 200nm or other lower-tech fabs are best for microcontrollers and cheaper stuff (like ESP32, Orange Pi and the like). When you want absolute lowest-costs and are willing to accept worse performance-per-cost.
 
So to summarize:

A) Price wars = bad for those involved
B) China infiltrating yet another key industry = bad for everyone

Also, not sure what the unidentified fab photos are supposed to add to this posting, but they seem relatively small compared to some others I have seen :)

Infiltrating key industries sounds really really strange when one considers China is close to 18% of the world's population.
 
Infiltrating key industries sounds really really strange when one considers China is close to 18% of the world's population.
If you look at Canada's housing industry you would understand.
 
tsk! tsk! Japan!
i still remember the days when Japan WAS a major chip foundry, seems to be and underdog these days
 
tsk! tsk! Japan!
i still remember the days when Japan WAS a major chip foundry, seems to be and underdog these days

My understanding is that Japan over-invested into an older-tech process... and the skills associated with that old process doesn't translate very well to modern processes. If you consider "when" Japan was rich (ie: 1970s and a bit of the 1980s), it makes sense.

Japan's GDP has been steady for decades now, meaning its difficult for Japan to get money to invest into new technologies. Especially new tech that's in the $Billion class like chip manufacturing.
 
tsk! tsk! Japan!
i still remember the days when Japan WAS a major chip foundry, seems to be and underdog these days

Depends where you look. If you look at something like the automotive market that uses ancient parts built on ancient nodes Japan is a powerhouse. But then a fire or whatever accidents hits one of Renesa's factories and suddenly half the industry grinds to a halt because ain't no one else gonna ramp up production on those ancient nodes and there's no alternative.
 
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