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TSMC Leads Other Foundries to Raise Prices

Jun 03, 2008 | By Ken Liu

Taipei, June 3, 2008 (CENS)--United Microelectronics Corp. (UMC), Semiconductor Manufacturing International Corp. (SMIC) and Vanguard International Semiconductor Co (VISC) have also announced they will raise prices shortly after No.1 foundry Taiwan Semiconductor Manufacturing Co. (TSMC) had made the announcement.

UMC's executives pointed out that surging oil prices had already increased the company's production costs, which had prompted their company to begin assessing countermeasures. The company, they added, would convince not only customers of mature processes but also customers of leading-edge processes to accept the company's price raising plans. However, the company had yet to set definite timetable for such price adjustments.

Although the company, they noted, had long absorbed the added costs independently, the company would not abruptly raise prices so as not to compromise customer relations.

Industry watchers estimated UMC would mainly raise prices of its 200-mm wafer process since material costs account for the majority of 200-mm production. For 300-mm tools, depreciation remains the major costs.

Insiders pointed out that contracts for sub 0.13-micron capacity utilizations at TSMC and UMC had considerably increased this month. For instance, Qualcomm, Nvidia, Broadcom, Marvell, and Ralink Technology have increased contracts to TSMC.

UMC estimated its capacity utilization rate for this quarter to surpass originally projected 80% mostly thanks to brisk orders from handset chip vendors including Xilinx and TI. Also, Nvidia will increase 65-nm chip contracts to UMC.

Executives of SMIC and VISC said they were happy to see the No.1 and No.2 players in the field raise prices. Industry watchers pointed out that price hikes of foundry industry had taken hold in light of SMIC's position to also hike the price, departing from its past underselling stance.

VISC's executives pointed out that adjusting upward average selling prices at a time when R&D spending had increased and semiconductor market had entered busy seasons could be moves to reflect market trend.

The price adjustments are estimated to inspire chip design houses to place orders for foundry capacities in advance of the hikes.


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