The global semiconductor foundry industry is experiencing a new wave of price hikes. Following reports that Taiwan Semiconductor Manufacturing (TSM) will increase prices for its 3-nanometer process by up to 15% in the second half of the year, United Microelectronics (UMC), Taiwan's second-largest foundry, has also announced plans to implement phased price increases, with the cycle potentially extending until 2027.
According to a recent report, UMC's Chief Financial Officer Chitung Liu stated at a shareholder meeting that the company plans to selectively raise prices for certain products in the second half of 2026 and will engage in broader price negotiations with customers in 2027, where increases could be more substantial. UMC cited rising raw material costs and higher construction expenses for its Singapore facility compared to Taiwan as the core drivers for these adjustments.
Previously, it was reported that UMC had planned to adjust wafer prices by approximately 10% in the second half of 2026, potentially effective as early as July. The consecutive price hike signals from these two major foundries indicate a systematic upward shift in the industry's pricing cycle, which will increase cost pressures for downstream chip design clients.
UMC's Price Increase Strategy: Selective First, Comprehensive Later
According to Chitung Liu's statements, UMC's current price adjustment strategy follows a clear phased approach. The increases in the second half of 2026 will be primarily "selective," involving new orders, new processes, and newly expanded capacity, with relatively limited scope; existing long-term contract prices will remain unchanged. Entering 2027, the company will push for more comprehensive price negotiations, where potential increases could be larger.
This strategy somewhat mitigates the short-term impact on existing customers while allowing UMC to gradually rebuild pricing power in new business negotiations. UMC explicitly cited the high costs of its Singapore facility construction and rising raw material prices as justifications for the increases, providing cost-based legitimacy for the adjustments.
UMC highlighted Singapore construction costs as one reason for the price hikes, even as its expansion plans in Singapore accelerate. UMC's new Singapore facility focuses on 22/28-nanometer nodes and specific specialized processes, with an initial planned monthly capacity of approximately 12,000 wafers, potentially expanding to 18,000 in the future. The new capacity is expected to ramp up gradually in 2026, with mass production possibly delayed until 2027.
Notably, silicon photonics, advanced nodes, and advanced packaging technologies are also part of UMC's Singapore expansion roadmap. The company's interposer capacity will increase from 3,000 to 6,000 wafers per month to better meet customer demand. The higher capital expenditure and operational costs associated with the Singapore facility construction constitute direct cost pressures driving UMC's current price adjustments.
Systematic Upward Shift in Foundry Pricing Cycle
UMC's decision to follow suit with price increases comes after Taiwan Semiconductor Manufacturing (TSM)率先发出强烈的提价信号 in the advanced process segment. According to supply chain sources, TSM plans to raise prices for its 3-nanometer process again in the second half of 2026 by up to 15%, with potential further increases of 5% to 10% in 2027.
On the demand side, cloud giants such as Nvidia, AMD, Google, and AWS are accelerating adoption of 3-nanometer technology, with demand for AI accelerators, custom ASICs, and flagship smartphone chips concurrently driving sustained full utilization of 3-nanometer capacity. On the supply side, rising overseas construction costs, increased depreciation pressures, and the ongoing yield ramp-up for initial 2-nanometer production provide support for these price increases. The market anticipates that this move will help TSM maintain its gross margin performance.
The consecutive price hike signals from TSM and UMC indicate a structural change in the semiconductor foundry industry's pricing cycle. For downstream chip design companies, whether they are AI chip clients utilizing TSM's advanced processes or consumer electronics and industrial chip clients relying on UMC's mature processes, all face rising foundry costs, which may to some extent be passed on to end-product prices.
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