Chinese automaker BYD’s semiconductor business will raise the price of IPM (intelligent power module) and IGBT (insulated-gate bipolar transistor) products by at least 5% starting July 1, citing increased cost of inputs from upstream suppliers resulting from the global chip shortage. The company’s announcement was circulated via a letter to customers.
The worldwide shortage of integrated circuits that began in the second half of 2020 has extended into 2021. It has caused many producers to increase their prices. BYD was one of 30 semiconductor firms that have raised prices by 5–30% since the beginning of Q2 2021.
Even major foundries like UMC and TSMC have had to adjust their pricing strategy and said they will hike prices again in the third quarter by as much as 30%, according to local media reports. The rate is well beyond the industry’s expectations of a 15% lift.
As relentless demand is set to outpace global chip supply for the rest of 2021, per a report from Tianfeng Securities, foundries are upping their production capacity. Meanwhile, Chinese investors are pouring billions of yuan into new chip projects, with the aim of producing 8-inch and 12-inch wafers, which are used in products like mobile phone chips, camera sensors, wireless communication chips, and automobile chips.
In China, the construction or planning of at least 40 new 12-inch wafer fabs is currently underway. However, investors should be wary amid the frenzy to create semiconductor companies, as not all chip projects are qualified, resulting in some ill-advised ventures ending in failure.
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KrASIA Connection features translated and adapted content published by 36Kr. This article was originally written by Liu Yichen for 36Kr.