Rising wafer foundry and backend manufacturing costs are putting more pressure on IC designers. ABMedia, citing Economic Daily News, reported that suppliers of power management ICs, display driver ICs, and microcontrollers (MCUs) are assessing a second round of price hikes for late 2026 to early 2027, with increases ranging from 5% to the double-digit percentage range. Final pricing will still need to be negotiated with customers.
Price reviews spread across mature chip categories
The report said the latest adjustment is not limited to a single product line. It covers several mature-use chip categories, with power management ICs, driver ICs, and MCUs at the front of the list as cost increases move through the supply chain.
The timing under review is late 2026 through early 2027. The size of the increase varies by supplier and customer, but the reported range runs from 5% to a double-digit percentage increase.
TSMC pricing signals add to the pressure
Wafer foundry services account for the largest share of IC production costs and are described as the main driver behind the latest pricing push. According to the report, Taiwan Semiconductor Manufacturing Co. (TSMC) is set to raise prices starting in January 2027, with mature-node price increases estimated at around 3% to 10%.
Advanced-node pricing is also moving higher. South Korean media outlet Digital Daily reported that TSMC had decided to raise 2 nm wafer prices by another 6% to 8% in the first quarter of 2027, citing higher manufacturing costs and a sharp jump in electricity expenses. Some customers had previously said the increase reached 10% and in some cases as high as 20%.
TrendForce had earlier reported that 12-inch wafer price increases were approaching in 2027 as AI demand tightened supply, with long-term contract prices reportedly moving up by 15% to more than 40%.
Early ordering does not equal a full demand recovery
Expectations of higher prices are already changing purchasing behavior downstream. In another report cited from Economic Daily News, IC design companies said some customers have started ordering earlier than usual. The reasons given include concerns over conflict in the Middle East and continued AI demand crowding out capacity. Customers expect costs to keep rising, so they are stepping up purchases to protect margins.
Still, IC designers said the recent increase in orders should not be read as a full market recovery. Suppliers are comparing current order volumes with the same period last year to assess the degree of possible over-ordering and to adjust shipment plans. The goal is to avoid a repeat of excessive ordering and elevated inventories that later weighed on the IC design market.
Switching foundries may not reduce costs
Options for IC designers are limited. The report said some customers are asking suppliers to use non-China supply chains, narrowing the range of foundries available to them. Moving production from Taiwan-based foundries to the United States is also not necessarily cost-effective.
That leaves designers with few cheaper alternatives, though it also gives them more room to pass higher costs on to customers.
Using a China-based foundry does not automatically ease cost pressure either. The report said major Chinese foundries are also considering price increases, though the scale has not been determined. Semiconductor Manufacturing International Corp. (SMIC) had already raised prices earlier this year. Reuters reported in August that the company had secured higher pricing for some of its most sought-after capacity for wafers scheduled for third-quarter input. Its average wafer selling price in the second quarter of 2026 rose 5.7% quarter over quarter, while capacity utilization reached 93.7%.
Cost pressure is clear, demand remains the open question
The direction on the cost side looks consistent, but demand signals are less clear. Foundries are raising prices, and IC designers are considering passing those costs through. At the same time, the companies themselves said recent order improvement includes an element of advance buying.
If end demand does not strengthen at the same time, the key questions for the first half of 2027 will be whether those price increases can stick and whether advance purchasing is followed by inventory correction.