According to a report, rising costs in upstream semiconductor manufacturing and tightening foundry capacity are driving up prices for Display Driver ICs (DDICs).
Omdia anticipates that market demand in the second half of 2026 will be weaker than in the first half. However, persistently increasing cost pressures are expected to continue supporting further price increases for DDICs.
The rapid growth in AI-related applications continues to fuel strong demand for Power Management ICs (PMICs) and Memory. Foundries in Taiwan and South Korea are reducing capacity allocations for DDICs used in televisions, monitors, and laptops, as well as for Touch and Display Driver Integration (TDDI) chips.
While global overall capacity remains in surplus, some large-size DDIC orders not constrained by geopolitical factors are gradually shifting from 8-inch wafer fabs in Taiwan to 12-inch fabs in mainland China. This order and production transition takes time and is currently causing temporary capacity tightness for DDICs in some application areas.
Simultaneously, the prices of key raw materials required for upstream semiconductor manufacturing are also showing a clear upward trend. The significant price increases for critical metals such as gold, silver, and copper, used in packaging and chip manufacturing, are pushing up the overall costs for wafer fabrication, packaging, and testing.
Consequently, foundries including Vanguard International Semiconductor (VIS), Powerchip Semiconductor Manufacturing Corporation (PSMC), and Semiconductor Manufacturing International Corporation (SMIC) raised their 8-inch wafer foundry prices by 5% to 10% quarter-over-quarter in Q1 2026.
Meanwhile, PSMC also increased foundry prices for its 12-inch wafer fab's HV 90nm process in Q1 2026. Entering Q2 2026, foundry prices continued to rise, with more foundries joining the price hike trend. It is expected that some foundry prices may continue to increase in the second half of 2026.
Wafer fabrication is the most significant component of DDIC cost, accounting for 60% to 70% of the total, with the silicon wafer cost itself constituting about 40%. This means any increase in foundry prices directly impacts the cost structure of DDIC manufacturers.
For IC design houses, the rising foundry costs provide strong justification to increase DDIC prices to reflect the escalating production expenses.
Smartphone and tablet TDDI chips have been among the first affected, with prices rising in Q2 2026, primarily due to reduced HV 90nm process capacity and foundry price hikes. Specifically, HD smartphone TDDI prices increased by 15% to 30% in Q2 2026 and are forecast to continue rising in the second half of the year.
Laptop DDICs have also been impacted. As this market is predominantly led by Taiwanese IC design houses, laptop DDIC prices increased by 5% to 15% in Q2 2026.
Monitor panel DDIC prices have an opportunity to rise in Q3 2026, while TV DDIC prices are expected to remain flat.
Omdia senior analyst Queenie Jiang stated, "The primary driver of this round of DDIC price increases is not demand growth but supply tightening. Although market demand in the second half of 2026 is expected to be weaker than in the first half, continuously rising costs and tightening capacity will still push DDIC prices higher to reflect the increasing production costs."
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