IC design company is considering renegotiation with TSMC, demanding that the price increase of mature process be reduced to 3% next year.
According to the Taiwan media "Electronic Times", industry sources revealed that the IC design company is considering renegotiating the price of contract manufacturing with TSMC next year. These IC design companies hope to reduce the increase in quotations for mature processes such as 45nm and 28nm to 3% to ease the cost pressure during the downturn in end demand.
TSMC had previously determined that the prices of most of its manufacturing processes would rise by about 6 per cent from January next year, according to sources.
Sources said that IC design companies have relieved the pressure on contract production capacity from second-line contract manufacturers and other channels, but they have not reduced TSMC orders so as not to lose support for subsequent production capacity. However, sources stressed that in the lingering market downturn, IC design company can not avoid further cost increases and profit decline, re-negotiation with TSMC is a helpless move. However, this does not mean that these companies are asking contract manufacturers to freeze the price increase, but to halve the increase.
It is reported that the capacity utilization of TSMC's Fab 15A for 28nm chips and Fab 14A for 45nm chips is now less than 100%, and is expected to decline further between the end of this year and the first half of next year. Sources said that other 8-inch and 12-inch fabs were fully loaded, which was also an opportunity for IC designers and TSMC to renegotiate the pricing of 45nm and 28nm processes.
Sources believe that the prospect of negotiations between IC Design Company and TSMC is uncertain, because TSMC's price rise next year is certain, and TSMC's move has been prompted by factors such as increased costs in the process of overseas capacity expansion and R & D costs brought about by advanced technology.
Although demand for chips for consumer applications has weakened, this is not a problem for TSMC, the sources said. TSMC can still reallocate its capacity to better support strong demand for data centres, cars and other applications.
