Wafer foundry price surge! After TSMC, UMC also announces phased price increases

The global wafer foundry industry is experiencing a new wave of price increases. Following reports that TSMC will raise its 3nm process quotations by up to 15% in the second half of the year, UMC, Taiwan’s second largest foundry, has also announced it will follow suit, planning to implement price hikes in stages, with the price increase cycle possibly extending to 2027.

According to TrendForce on Thursday, UMC CFO Chitung Liu stated at the shareholders' meeting that the company plans to selectively increase prices for some products in the second half of 2026, and larger-scale customer price negotiations will take place in 2027, at which point the magnitude of increases could further expand. UMC has cited rising raw material costs and higher construction expenses in Singapore compared to Taiwan as core drivers for this round of price adjustments.

Previously, TechNews, citing a client notice in April, reported that UMC plans to adjust wafer prices in the second half of 2026, with an increase of about 10% possibly taking effect as early as July. Successive price hike signals from the two major foundries indicate that the pricing cycle of the foundry industry is systematically shifting upwards, putting greater cost pressure on downstream chip design clients.

UMC’s Price Hike Path: Selective First, Then Broad Implementation

According to Chitung Liu, UMC's price adjustment strategy is clearly phased. The 2026 H2 adjustments will focus on being "selective," involving new orders, new processes, and new capacity expansions, with relatively limited increases; existing long-term contract prices will remain unchanged. In 2027, the company will pursue broader price negotiations, with potentially greater increases.

This strategy reduces the impact on existing clients in the short term, while also allowing UMC to gradually regain pricing power in new business negotiations. UMC has explicitly cited high Singapore construction costs and rising raw material prices as the basis for these adjustments, providing legitimate cost-side support for the price hikes.

UMC names the cost of building in Singapore as one reason for the increases, and at the same time, its Singapore expansion plan is accelerating. UMC's new Singapore fab will focus on 22/28nm nodes and specific specialty processes, with an initial planned monthly capacity of around 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 being considered in UMC’s Singapore expansion roadmap. UMC’s interposer capacity will double from 3,000 to 6,000 wafers per month to better meet customer demand. The higher capex and operational costs associated with building in Singapore are direct sources of cost pressure for this round of price hikes at UMC.

Foundry Pricing Cycles Shift Systematically Upwards

UMC’s follow-up price increases come as TSMC has already sent a strong signal of price hikes for advanced processes. According to Taiwan Commercial Times, citing supply chain sources, TSMC plans to further raise 3nm process quotations by up to 15% in the second half of 2026, with an additional potential increase of 5%-10% in 2027.

On the demand side, cloud giants like Nvidia, AMD, Google, and AWS are rapidly adopting 3nm technology, with surging demand for AI accelerators, custom ASICs, and flagship smartphone chips driving 3nm capacity to remain fully loaded. On the supply side, rising overseas construction costs, heavier depreciation, and 2nm yield ramp-up challenges all bolster the rationale for this round of price hikes. The market expects this move to help TSMC maintain its gross profit margin performance.

TSMC and UMC’s successive price hike signals point to a structural change in the wafer foundry industry’s pricing cycle. For downstream chip design firms, whether clients relying on TSMC’s advanced process AI chips or those depending on UMC’s mature process chips for consumer electronics and industrial chips, all will face higher foundry costs, which could, to some extent, be passed on to end product prices.