On August 4, 2026, Vanguard (VIS) chairman Jackson Hu, a TSMC-invested company, dropped a bombshell at the earnings call: the company had begun discussions with customers on 2027 foundry prices, with increases expected to be larger than this year. UMC said 2027 price hikes were confirmed and broader than in H2 2026, while PSMC revealed it was assessing operating and depreciation costs and considering following suit in 2027.
The collective stance of the three major Taiwan-based mature-process foundries turned "mature process price hikes" from industry speculation into a firm trend. Driven by AI demand spillover, strategic capacity reductions by international giants, and rising manufacturing costs, foundry pricing is undergoing a structural upward shift. The mature process segment, long seen as a "severe overcapacity zone," has unexpectedly become one of the most resilient sectors in the 2026 semiconductor market.
1. Three Foundries' Multiple Rounds of Price Adjustments: From Probes to Full Implementation
Reviewing the price hike timeline since 2026, this is no one-off fluctuation but a series of progressive adjustments.
Vanguard: First to Fire the Price Hike Shot
Vanguard was the earliest to signal. In late 2025, it notified customers of price hikes of about 10% for 8-inch BCD platform foundry services. On March 13, 2026, it formally issued price adjustment letters, revising prices for some products from April. On August 4, Chairman Jackson Hu explained at the earnings call that AI demand had tightened capacity for power management chips and discrete devices, with supply shortages extending into 2027. Combined with rising labor, material, equipment, and expansion costs, the company had discussed next year's prices with customers, expecting 2027 increases to be even larger.
UMC: Moving from Selective Hikes to Full Renegotiation
UMC's price hike path is clearer. On April 16, 2026, it sent formal notices to customers announcing wafer price adjustments in H2, with rates varying by product mix, capacity agreements, and long-term partnerships. At the May 27 shareholders' meeting, CFO Liu Chi-tung confirmed a selective, moderate price hike strategy for H2: 8-inch wafer prices up about 10-15%, and 12-inch wafers mainly at mature nodes including 80nm, 55nm, and 40nm, up about 5-10%, while long-term contract customers kept original terms. Heading into 2027, UMC will push for broader price negotiations with potentially larger increases, citing rising raw material costs and higher Singapore fab construction costs than in Taiwan as core drivers.
PSMC: Most Aggressive Pace, DRAM Foundry Prices Up 45%
PSMC has been the most aggressive. It started price adjustments in Q1 2026 with new pricing based on wafer start timing. At the July 14 earnings call, President James Ju announced a 45% hike in DRAM memory foundry quotes from July, along with 10-15% increases for 8-inch and 12-inch logic foundry prices, and said further hikes were being considered next year. Ju noted that rapid AI computing demand had led major global cloud providers to reserve DRAM capacity years in advance, with the supply-demand gap likely extending to 2027. Due to time lags in wafer manufacturing, shipments, and customer settlements, the effect is expected to show in revenue and profit from November.
2. Three Drivers Converge: Why Mature Process Suddenly Became Scarce
This round of price hikes is no accident but the result of demand explosion, supply contraction, and rising costs, reflecting a structural shift in the semiconductor industry.
Demand Side: AI Effects Spill Over Across the Supply Chain
AI infrastructure construction is extending from advanced process to the entire supply chain. AI server power consumption has reached kilowatt levels, demanding higher power conversion efficiency, power control, and analog chips—most made on 40nm, 28nm, or even more mature nodes. Meanwhile, AI is expanding to edge computing, boosting demand for Wi-Fi 7, IoT chips, MCUs, and other mature-process chips. TrendForce data shows global top-10 foundries' 8-inch capacity utilization rebounded to 88% in 2026, reaching 90% in H2, indicating 8-inch mature process has entered a tight supply state expected to last through H1 2027.
Supply Side: Strategic Cuts by International Giants Worsen Mismatch
In sharp contrast to booming demand, supply is contracting. TSMC has said it will gradually reduce 8-inch capacity, planning to shut some 8-inch fabs by 2027, and will moderately cut output of mature processes above 90nm on 12-inch wafers. Samsung's cuts are more aggressive, with 8-inch and 12-inch mature process prices up 10-20%. Global 8-inch capacity already shrank 0.3% in 2025 and is expected to decline further in 2026, while new capacity is mainly going to advanced and specialty processes. In the near term, new mature process capacity cannot fill the gap, worsening the supply-demand mismatch.
Cost Side: Supply Chain Restructuring Pushes Up Manufacturing Costs
Fabs face pressure not only from raw material and equipment procurement but also from global supply chain restructuring. Geopolitical factors force fabs to build redundant capacity and diversified supply networks. Overseas projects like UMC's Singapore fab and TSMC's U.S. fabs have significantly higher capital expenditure and operating costs than in Taiwan, which are eventually passed to customers through price adjustments. Meanwhile, global semiconductor equipment remains in short supply, used-equipment prices rise, and new equipment lead times extend, raising capital expenditure and depreciation for mature process lines. Talent competition intensifies, pushing up compensation and squeezing profit margins. The rigid rise in costs means this round of price hikes is not short-term opportunism but a sustainable structural adjustment.
3. Industry Chain Impact: Profit Redistribution and Downstream Pass-Through
The mature-process foundry price surge is reshaping profit distribution across the semiconductor supply chain.
- For foundries: Higher prices directly lift average selling prices (ASP), significantly improving gross margin and net profit amid high utilization. Analysts generally expect UMC, Vanguard, and PSMC utilization to exceed 90%, with gross margins approaching 45% or even 50%, offering strong earnings upside.
- For chip design companies: Higher foundry costs will squeeze profit margins, but most leading companies plan to pass costs to end products. Design houses with pricing power can transfer the pressure, while smaller ones face gross margin declines.
- For equipment and materials suppliers: Improved foundry profits will accelerate expansion plans, indirectly benefiting upstream firms such as Applied Materials, Shin-Etsu Chemical, NAURA, and AMEC, ushering in a new upturn for equipment and materials.
Notably, this price surge coincides with the memory chip rally. DRAM contract prices rose 14.3% month-on-month in July to a record high, and NAND benchmark prices broke $30. Now mature-process foundry prices are following suit, showing the semiconductor upturn is spreading from memory to logic and from advanced to mature processes.
4. Vietnam Perspective: Supply Chain Opportunities in the Price Surge
For Vietnam, which is accelerating the building of its semiconductor ecosystem, this mature-process price surge is both a challenge and a rare window of opportunity.
In terms of industry positioning, Vietnam's semiconductor strategy follows the pragmatic path of "packaging and testing first, manufacturing later." In January 2026, Vietnam's first wafer fab—led by Viettel Group—broke ground, focusing on mature processes from 90nm to 65nm, prioritizing chips for strategic industries such as aerospace, telecom, IoT, and automotive. This aligns with the global trend of tight mature process supply and rising prices: when mature process capacity becomes scarce, regions with local manufacturing capabilities and the ability to absorb international capacity transfers gain greater bargaining power and investment appeal.
From a supply chain perspective, mature-process foundry price hikes will drive price pass-through to downstream segments such as power management chips, power devices, and automotive-grade chips. Vietnam, which has built scale advantages in electronics manufacturing and packaging/testing, is well positioned to absorb capacity transfers from global supply chain diversification. For investors planning to enter Vietnam, the following areas merit attention:
- Packaging and testing: With mature-process chip volumes and prices rising, packaging and testing demand expands. Vietnam, as a key destination for packaging capacity transfers, presents expansion opportunities.
- Power semiconductors and power management: AI servers and new energy vehicles are driving surging demand for power management and power devices, opening broad local supporting opportunities in Vietnam's electronics manufacturing sector.
- Equipment and materials support: Global fab expansion is boosting demand for equipment and materials. Vietnam can leverage this trend to cultivate local supporting supply chain capabilities and reduce reliance on any single market.
5. Outlook for 2027: Structurally Higher Pricing Cycle, Industry Enters Seller's Market
Looking to 2027, with UMC, Vanguard, PSMC and other Taiwan-based players fully renegotiating long-term contracts, the global mature-process foundry pricing cycle is shifting structurally upward. Both TrendForce and Morgan Stanley believe that with sustained AI demand, constrained capacity, and stubborn cost pressures, mature-process foundry prices are expected to stay high, and the industry has officially entered a "seller's market."
For the upstream and downstream supply chain, this means: foundries' profit centers will systematically rise, with long-term contract prices becoming the core indicator of 2027 momentum; downstream design companies must digest cost pressure through product mix upgrades and price increases; equipment, materials, and packaging/testing will benefit from both expansion and price hikes. For readers focused on semiconductor investment opportunities, the reversal of mature process from "overcapacity" to "shortage" underscores the combined cyclical and growth nature of the semiconductor industry—in the new AI-driven demand cycle, any segment can become the spark that ignites the market.
From memory to logic, from advanced to mature processes, the 2026 semiconductor market is staging a full-chain boom. And Vietnam, as a closely watched beneficiary in this global industry restructuring, is only just beginning its semiconductor story.
