Samsung and Key Foundry to raise foundry services price by 20%

Samsung and Key Foundry is planning to increase the prices of their foundry services during the second half of the year, TheElec has learned.

The pair has notified their customers recently that they are planning to increase wafer prices by between 15% to 20%, people familiar with the matter said.

Some customers have already approved the increased prices and have signed the contracts, they said.

The rate of price increase depends on the customer's wafer order volume, the kind of chip and contract duration.

The increased price will be applied four to five months from now. Foundry companies do that increase prices for chips they have already received orders for.

Meanwhile, South Korea wafer fabrication back-end process companies have also increased their service prices.

These packaging and assembly companies will apply the increased price in a month in September.

Since the global chip shortage started late last year, global foundry companies have increased the prices of their service multiple times.

TSMC, the world's largest foundry firm, have been increasing its service price by 10% to 20% since late last year.

The Taiwanese chip giant has reportedly increased the price of 16nm or under by 20% and the other processes by 15% just this month. Products that are 7nm or under will reportedly see a price increase between 3% to 10%. 

Fellow Taiwanese foundry UMC also increased its service price by 30% twice this year alone __ once early in the year and another time in June.

Taiwan's PSMC and China's SMIC as well as GlobalFoundries of the US also increased their prices during the third quarter this year.

The increase will likely come as great pressure for fabless companies. They cannot reduce their orders just because foundry service costs have gone up. Because of the shortage in chips and production capacity, fabless companies are stuck in position where they are just happy to be able to see the chips they design made and booked at foundries.

For Foundry companies, the increased price will secure them profitability needed to cover the expenditure in facilities to expand or maintain their production capacities.