SUPPLY CRUNCH: Powerchip said it expects price hikes this quarter to be 30 percent, following a rise of 23 percent last quarter, to address persistent capacity constraints
By Lisa Wang / Staff Reporter
Powerchip Semiconductor Manufacturing Corp (力積電) is negotiating with customers to further hike prices by 10 to 20 percent next year, the logic and memory chipmaker said yesterday, citing persistent capacity constraints across the industry.
The company said it would prioritize capacity allocation for customers under long-term supply agreements with fixed volumes and pricing.
Last quarter, Powerchip raised prices by 23 percent from the previous quarter, and expects another 30 percent increase this quarter, it said.
Powerchip Semiconductor Manufacturing Co’s name and logo are pictured outside the company’s 12-inch fab in Tongluo Science Park in Miaoli County on July 16, 2024.
Photo: Grace Hung, Taipei Times
“Provided that artificial intelligence [AI] momentum remains strong, we hold a highly optimistic outlook for 2027 revenue and profitability,” Powerchip president Martin Chu (朱憲國) said at an earnings conference.
The company also unveiled a new capacity expansion plan for the next three to five years, saying that it is scouting a site to build a small-scale chip facility in Taiwan, Japan or Singapore.
The new plant would focus on expanding advanced packaging-related technologies, including post-wafer-finish (PWF) service, interposers used in advanced chip-on-wafer-on-substrate packaging and integrated passive devices (IPD), which are used in AI-related applications, it said.
“We have to expand clean room space to address strong customer demand for those technologies,” Powerchip chairman Brian Shieh (謝再居) said.
Demand for IPD would surge to as many as 50,000 wafers a month in the second half of next year, exceeding its current capacity of 10,000 wafers per month, he said.
To mitigate capital expenditure risks, the company aims to secure 30 to 60 percent of funding for new production line expansions from customers via leasing or prepayments, Shieh said.
Micron Technology Inc has set a precedent by fully funding the manufacturing equipment for Taiwan’s PWF mid-to-back-end packaging expansion through prepayments, he said.
Powerchip is poised to become the world’s sole memory manufacturer producing legacy DRAM from DDR1 to DDR3, utilizing 63-nanometer to 20-nanometer process technologies, Shieh said.
Those technologies are projected to have an extended lifecycle of 10 to 15 years, he said.
The company attributed the ongoing supply crunch to aggressive AI server buildouts, which have spurred massive demand for high-bandwidth memory (HBM) and squeezed mature DDR3 and DDR4 DRAM production.
“As major memory makers aggressively reallocate capacity to HBM and exit mature DRAM, we expect supply tightness for customers,” Chu said. “We anticipate that our niche DRAM foundry pricing will remain robust, showing no signs of a downward adjustment.”
Powerchip attributed the mild pricing weakness in DDR3 DRAM to a temporary supply influx, driven by an enterprise refresh cycle where outdated computers were replaced with AI-capable models.
This pricing softness is expected to be short-lived, the company said.
The company expects revenue to expand by a double-digit percentage sequentially this quarter, after revenue expanded 23 percent last quarter.
Net profit last quarter almost doubled to NT$6.5 billion (US$200 million), from NT$3.29 billion in the previous quarter. That reversed a loss of NT$2.73 billion in the third quarter last year.
Earnings per share rose to NT$1.38 last quarter from NT$0.76 in the previous quarter, while gross margin improved to 48 percent from 28 percent a quarter earlier.