June 4, 2008 – UMC has announced plans to raise prices, days after market-leading TSMC said it was exploring such a move of its own, decisions seen as ways to not only boost profits, but pressure customers to file orders ahead of the busy seasonal periods.

The Taiwan Economic News reports that UMC, like TSMC, is partly blaming surging oil prices for increased production costs that have historically been absorbed but now need to be countered. Also, the price increases would apparently be directed not only at its leading-edge products but also mature processes. Like TSMC, no scale or timetable has been disclosed, though the paper cited unnamed “industry watchers” speculating price hikes will mainly target the foundry’s 200mm processes where material costs impact the most (for 300mm tools, depreciation is the No.1 cost factor).

UMC, which like TSMC is seeing a surge in 0.13μm orders, expects total capacity utilization to surpass expectations of 80% due mainly to brisk business from handset vendors, including Xilinx and TI, as well as more 65nm business from NVidia.

Meanwhile, SMIC and Vanguard execs are said to be “happy to see the No.1 and No.2 players in the field raise prices,” though they too are mulling such a move, the paper notes, adding that the moves could reflect market trends as R&D spending increases and the chip industry enters the busy seasonal back-to-school and holiday build periods.