DB HiTek increases foundry price by up to 20%

South Korean chip maker DB HiTek has decided to increase the price of semiconductor contract production, or foundry, by up to 20%, TheElec has learned.

The company decided to increase the price due to high demand for foundry services globally, people familiar with the matter said. DB HiTek has also secured multiple new customers due to this trend. DB HiTek’s fab are currently running at full capacity.

The company notified its customers that it will increase its contract price in 2021 by a minimum of 10% and maximum of 20%. Some customers showed resistance but eventually accepted the hike due to their lack of alternatives.

DB HiTek has already signed all the contracts for production next year.

The South Korean chip maker currently runs two fabs, one in Bucheon, Gyeonggi Province and another at Eumseung, North Chungcheong Province. These factories have been operating at 100% utilization, which was insufficient to handle all the orders.

The company had a production capacity of 100,000 wafers per month in 2014; this has increased to 129,000 wafers per month as of the third quarter of 2020. 

DB HiTek isn’t the only company that will increase price for foundry services. SK Hynix and Samsung Electronics are also planning to increase the price of their 8-inch wafer foundry production, people familiar with the matter said. 

Globally, there is a lack of 200mm production capacity compared to demand. 8-inch foundry are used to produce analogue semiconductors such as image sensor, power management IC, display driver IC and micro controller unit. 

Demand for power management IC and image sensor is rising due to demand from 5G, smartphones and autonomous driving. US’s ban against Chinese foundry SMIC is also likely to increase unease from customers over lack of foundry capacity.

Foundry companies were accepting orders from customers with large order volumes, the people said.