Increased by 10-20% in the second quarter from the previous quarter
Concerns over domino price hikes in chip and finished products
Equipment prices skyrocket due to the supply shortage of 8-inch found

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Foundry supplies in both South Korea and abroad drastically increased the price of consigned semiconductor production in the second quarter following the first quarter. Some contracts were even entered with prices up to 50% higher than before. Attention has been drawn to whether this trend will increase semiconductor chip prices and affect the prices of final products, such as automobiles and IT devices. The additional expansion of plants to stabilize the price is not easy since semiconductor equipment price has skyrocketed due to the severe shortage of 8-inch foundry supply. The semiconductor supply shortage due to foundry is expected to continue for a while.
On June 2, it was reported that domestic and foreign foundry manufacturers increased the price of consignment production in the second quarter of this year by 10-20% from the previous quarter. The overall increase is similar to the first quarter, but prices were raised by up to 50% depending on the quantity in some individual contracts.
An official from a fabless firm using an 8-inch foundry in Korea said, "Our client (set company) has requested an increase in the supply of semiconductors, so we’ve renewed the contract with the foundry supplier at a 50% higher price because apparently the requested quantity cannot be supplied at the previous price."
The situation is similar for overseas foundry suppliers. Taiwan's UMC raised the price again by 10% in the second quarter, following a 10% price increase in the first quarter. In addition, some contracts were notified of 10% price increase next January. It is unusual for a price increase to be confirmed in advance until the next year's contract.
Such price increase is due to the prolonged shortage of 8-inch foundry lines and the limited production capacity of the industry, although finished product manufacturers demand additional production of semiconductors in the 8-inch foundry line, such as analog, power semiconductors, and display driving chips. Moreover, the growing number of fabless firms looking for foundries is naturally leading to price increases. An official from a domestic foundry company said, "At this point, we cannot accept all clients (fabless) with our current production capacity. As the demand for fabless increases, the overall price of the foundry consignment production market is rising."
The problem is that it is not easy to expand fabless production to resolve the supply shortage. It requires a large-scale investment, which puts high burden on foundries. Although production equipment can be added to some idle spaces, it is difficult to willingly make purchases due to skyrocketing semiconductor equipment prices. An official from a semiconductor equipment distributor said, "Due to such a small quantity of new products, even the prices of used 8-inch semiconductor equipment have jumped to the price of new products. Even if a client places an order, it will take more than 12 months for the delivery to be made."

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<Forecast of Worldwide Semiconductor Inventory Index (Source=Gartner)>

A foundry price increase can result in a higher price of final finished products along with the chip because it is difficult for fabless companies to avoid a loss without raising the chip unit prices due to the rise in consigned production costs. “This is the first time we have raised the unit price of semiconductor chips in 10 years,” said an official of a fabless company. Not sure if the customer, the finished product manufacturer, will accept this, but we have no choice but to raise the chip unit price to reflect the price increase for consignment production.”
It is forecasted within the industry that the price of foundry consignment production will increase until next year. This is because it is difficult to overcome the supply shortage of semiconductors and price hikes for consignment production immediately when the foundry fab manufacturing cannot be expanded. Gartner predicted that the supply shortage of 8-inch foundry semiconductors will continue until the second quarter of next year.
By Dongjun Kwon, staff reporter