South Korean 8-inch chip foundries, just like their Taiwanese counterparts TSMC and Vanguard International Semiconductor, have lowered their service prices this year from low demand from the IT sector, TheElec has learned.
Their transition to 12-inch foundries has also impacted their drop in service prices, sources said.
South Korean chip foundries have lowered their 8-inch wafer service by approximately 10%, they said.
This price drop happened at different time periods and processes for different companies but this trend was across the whole foundry sector, sources from local fabless chip companies said.
Some foundry service had their price drop by up to 20%, they added.
Companies offer 8-inch wafer services for the production of power management IC, display driver IC, microcontroller unit, and others.
DB Hitek, as of the second quarter, had a fab operation rate of 73.83%, a drop of over 23% from last year’s 97.68% in the same time period.
However, Samsung Foundry, Key Foundry, and SK Hynix System IC all had operation rates of 40% to 50%, sources said.
Some of these companies, due to the drop in demand, have even turned off the power of some of their equipment, a rate move in the sector where throughput must be maximized.
Texas Instrument’s intentional price drop to expand its power management IC sales have also impacted its competitors, the sources said.
The US chip maker has an advantage as it uses its own 12-inch foundry that can lower cost by over 20% compared to 8-inch foundry, the sources said.
The fact that South Korean chip foundries were also transitioning towards 12-inch foundries caused them to offer a discount to maintain their 90nm and 55nm process operation rates.
These companies are expected to continue to be pressured by their fabless chip customers to lower their prices further for the remainder of the year.
DB Hitek has predicted that its operation rate will be late-60% during the second half of the year, a further drop than the first half.