Semiconductor shortage to increase prices in 2021

A shortage in production capacity compared to demand in semiconductors is expected to increase their prices in 2021. Some companies have already notified their customers of the price hike.

TSMC, the world’s largest contract chip maker, recently scrapped its price cut policy (up to 3%) for major customers. This is likely due to overdemand. 

This is the same for other foundry companies. GlobalFounderies reportedly is operating its fabs at near 100% capacity. Samsung Electronics is in a similar position. 

Taiwan’s 200mm foundries, UMC and VIS, have also increased chip production prices. South Korean foundry DB HiTek recently notified customers of a 20% hike in prices. DB HiTek’s fabs are running in full capacity.

Shortage of supply in the foundry market causes memory and system semiconductor prices to rise. Market research firm TrendForce expects solid-state drive (SSD) controller chip price to increase by up to 20%. This is due to controller makers being unable to meet demand from SSDs. TSMC and UMC’s shortage in production capacity is also expected to cause this increase.

A rise in controller chip prices leads to price rise of embedded memories like eMMC and UFS. Prices of eMMC is expected to rise 5% in the first quarter of 2021.

Fixed prices of DRAM is also expected to rise. Spot prices are showing increase. DRAM spot price was US$3.46 in December, a rise of 30% from November. TrendForce expects prices to increase by around 5% in the first quarter of 2021 compared to the fourth quarter.

Prices of PMIC and DDI, which are produced by 8-inch foundries, is also expected to rise. AOS said it was increasing PMIC prices by up to 20% staring on January 1. The company had said COVID-19 and changes in the worldwide PMIC supplychain have caused the price increase and extension in lead time.

Taiwan’s Novatek, which makes DDI for LCD, announced that it will increase prices of touch DDI and DDI chips in the first quarter of 2021. According to 
DigiTimes, the company has already finished negotiations with its customer.

China’s Goodix also announced that it will increase the price of its GT9 Series touch chip by 30% starting in January 1. Taiwan’s Global Wafers is expected to increase spot prices of silicon wafers. The company was running its 12-inch, 8-inch and 6-inch production lines at near full capacity, the firm had said.