AI demand strains mature chip processes, price hikes expected to continue

The escalating demand for artificial intelligence (AI) is creating a bottleneck in the semiconductor industry, particularly affecting mature manufacturing processes. A recent investigation by TrendForce indicates that the supply-demand structure for these mature processes is rapidly changing due to factors like capacity competition from new AI applications, raw material inflation, and significant production cuts by major players.

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AI demand continues to heat up, accelerating changes in the supply and demand structure of mature processes.

Following price hikes in the first half of the year, chip manufacturers are preparing for another round of price increases in the latter half of 2026. TrendForce anticipates that this upward price trend for mature semiconductor processes will extend into 2027. This situation is exacerbated by leading wafer foundries gradually reducing their 8-inch and 12-inch mature process capacity to focus on advanced processes or packaging. Smaller manufacturers are also reallocating their limited capacity towards higher-margin AI-related components, such as power management ICs, silicon interposers, and optical communication components, while decreasing the production of lower-margin products like image sensors (CIS) and driver ICs.

The strain on 8-inch foundries is particularly evident, with utilization rates climbing. TrendForce data shows that the average utilization rate for the world's top 10 wafer foundries' 8-inch capacity has risen to 88% in 2026, projected to reach 90% in the second half of the year, signaling a tight supply situation. Consequently, 8-inch foundry prices saw a general increase of 5-15% between the first and second quarters of 2026, with further price hikes being planned for late 2026 and into 2027.

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The average utilization rate for the world's top 10 wafer foundries' 8-inch capacity has risen to 88% in 2026, projected to reach 90% in the second half of the year.

While consumer electronics may face suppressed demand in the second half of the year due to rising costs of memory and other components, and many clients are negotiating to postpone price increases, the semiconductor manufacturing sector faces persistent cost pressures. Raw material inflation, long-term production cuts by major companies, and the continuous demand from AI applications eroding capacity mean that price increases in 2027 are likely unavoidable. Even 12-inch processes with tighter supply are seeing price adjustments of 5-10% in the second and third quarters of 2026, with intentions for broader price hikes in 2027.

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The price increase for 8-inch related foundries has been fully implemented from Q1 to Q2 2026, with an average increase of 5-15%.