According to Taiwanese media outlet Digitimes, in the past few weeks, chip manufacturers from large to small companies have been issuing price increase notices to their customers or beginning to renegotiate prices for certain products with individual customers, hoping to pass on the gradually rising manufacturing costs across the supply chain.

Although wafer foundry costs have been rising recently, for many IC design companies, the price increase pressure from packaging costs is the most unbearable.

8-inch wafer

According to reports, the recent rise in wafer foundry prices is primarily due to the lack of significant expansion in 8-inch wafer capacity over a long period, coupled with pressure from demand for power supply products such as PMICs and Power Discrete, resulting in continued supply shortages. Since DDIC products heavily rely on high-voltage processes, the tight 8-inch capacity leads to increased costs for these processes.

Regarding 12-inch wafers, some Taiwanese foundries have recently reduced their high-voltage process capacity, keeping related production lines at high utilization rates and supporting rising prices for mature processes.

Overall, both 8-inch and related mature 12-inch processes are currently facing tight supply and rising costs, putting chip manufacturers under greater pressure to adjust their prices.

Back-end packaging and testing

Besides front-end wafer foundry, back-end packaging and testing are also under pressure. Chip products undergo multiple processes including gold bumping, packaging, and testing. Recently, due to tight packaging capacity and rising material and labor costs, packaging and testing foundry prices have been trending upwards, with the most significant pressure on COF (Chip-on-Film) and COG (Chip-on-Glass) product lines.

It is worth noting that international gold prices have remained high since 2024, further pushing up the cost of gold bumping materials. Although some companies are gradually introducing alternative materials or other process solutions to reduce their reliance on gold, it will be difficult to completely offset the cost pressure brought by rising gold prices in the short term.

For chip suppliers, if the upward trend in upstream wafer and packaging and testing continues, the possibility of future price increases will further increase. The final increase will still depend on product type, end-user applications, market supply and demand, and customer structure.

The demand for AI

On the other hand, the overall wafer foundry industry continues to expand, driven by AI demand. In 2025, the global wafer foundry industry benefited from AI applications and preventative inventory buildup in the supply chain, with its output value exceeding US$200 billion. Looking ahead to 2026, with continued growth in demand for AI-related main chips, peripheral ICs, and data centers, the global wafer foundry industry size is expected to further reach US$250 billion.

In terms of the competitive landscape, TSMC's leading position remains relatively stable due to its advanced processes and capacity advantages; Samsung and Intel are accelerating their efforts to secure the second place in the wafer foundry market.

As for Chinese wafer foundries, in addition to continuing to expand their mature processes, they are also gradually advancing into advanced processes such as 7nm. In the future, the market's focus on Chinese companies will extend from mature processes to their competitiveness in advanced processes.

TrendForce forecasts that the global wafer foundry market value will grow by 24.8% year-on-year to US$218.8 billion in 2026, with TSMC's value growth reaching 32%, which will be the source of growth momentum.

TSMC's advanced process capacity of 5/4nm and below is expected to be fully utilized until the end of the year, with order visibility extending to 2027, maintaining an upward trend in advanced process prices. In contrast, while mature processes have seen some recovery supported by AI power supply products, 12-inch 28nm and above mature processes still face the dual pressures of capacity expansion and weak consumer demand, resulting in a continued divergence in overall supply and demand.

For the supply chain, 2026 will present a clear "dual-track" situation: on one hand, AI will continue to drive demand for advanced processes and advanced packaging, enabling leading manufacturers to maintain high growth; on the other hand, the mature process market will seek a new balance between localized tightness and overall demand divergence.

Source: Semiconductor Industry Observer (compiled)