[News] Taiwan’s UMC Reportedly to Slash Supplier Prices 15% in 2026—Mature Node Shake-Up Ahead

Amid the aggressive expansion strategy of Chinese foundries and weak demand on products like automotive electronics, Taiwan’s second-largest foundry UMC has reportedly notified its suppliers that, starting January 1, 2026, all supply contracts must see a price reduction of at least 15%, as revealed by Commercial Times.

As the report highlights, this marks the first large-scale move in recent years by a foundry to demand price cuts from its supply chain. Analysts cited by the report further note it could signal the beginning of a new structural adjustment for mature nodes.

In Q2 2025, 22/28nm processes made up 40% of UMC’s wafer revenue, up from 37% in Q1. Meanwhile, 40nm contributed 15% of total sales, according to the company. Notably, UMC has yet to record any revenue from 14nm and below, as its 12nm collaboration with Intel is not expected to enter mass production until 2027.

Battle to Protect Margins

According to Commercial Times, UMC declined to comment on the price-cut notice but highlighted that volatile global conditions and rising energy, material, and logistics costs are weighing heavily on its operations and margins.

It is worth noting that these price adjustments will likely play a key role in UMC’s future capacity allocations and partnership decisions, the report adds. The scale of the adjustments, as per Commercial Times, is expected to cover raw materials such as silicon wafers, chemicals, gases, and equipment, and could potentially extend to services like testing, logistics, and maintenance.

As the report points out, UMC’s gross margin has fallen from 45.12% in 2022 to 27.72% in H1 this year, well below TSMC’s nearly 60%. With its new Singapore fab coming online in 2026, depreciation costs are set to rise further, adding more pressure on profits, the report notes.

Back in July, the Economic Daily News already reported that Taiwan’s leading IC design firms are sharply cutting wafer foundry orders for mature nodes in the second half of the year. In Q3 alone, orders have reportedly dropped 20–30% from Q2 levels. As a result, utilization rates at mature-node foundries could fall from around 70% in the first half to 60% or lower in the second half, the report noted.

Oversupply and Price Pressure in 2026

Meanwhile, Commercial Times also notes that Chinese foundries, led by SMIC and Hua Hong, are continuing to expand 28nm to 90nm capacities. This surge in mature process capacity could far outpace end-market demand, creating oversupply pressure. In this context, UMC’s early push to cut supplier prices appears to be a strategic move to get ahead of upcoming pricing competition, as per Commercial Times.

Even Chinese foundries themselves have been facing margin pressures against this backdrop. According to SMIC’s latest financial report, the company’s gross margin was 20.4% in Q2 2025, down from 22.5% in Q1 2025.

Looking ahead to 2026, Commercial Times notes that the mature process segment is set to enter a “volume up, prices down” phase. Mature foundries like UMC, Vanguard, PSMC, and Hua Hong are expected to cut prices to stay competitive, exerting significant downward pressure on ASP, the report adds.

Read more

• [News] Mature Node Orders Reportedly to Drop 30% in 2H25—UMC, VIS, PSMC Under Pressure
• [News] UMC Reportedly Mulls Rejoining Advanced Node Race via Rumored Intel 6nm Tie-Up

(Photo credit: UMC)