DDIC suppliers are planning to raise prices

According to TrendForce’s latest survey, as the cost of semiconductor wafer foundry and back-end packaging and testing will gradually increase starting from 2025, and the price of precious metal raw materials continues to rise, which will increase the cost pressure on display driver IC (Display Driver IC, DDIC) manufacturers, some manufacturers have recently begun to communicate with panel customers to evaluate the possibility of raising quotations.

From the cost structure analysis, wafer foundry accounts for up to 60% to 70% of the overall DDIC cost, while back-end packaging and testing foundry costs account for about 20%. Recently, the cost of raw materials, energy and labor has pushed up the wafer foundry quotations. In particular, the eight-inch production capacity has not been expanded for a long time and has been squeezed out by power products such as PMIC and Power Discrete. The supply remains tight, and the cost of the high-voltage process mainly used by DDIC has also increased.

In the 12-inch wafer sector, Taiwanese foundries have recently reduced their high-pressure process capacity, prompting more customers to turn to Nexchip (Hefei Jinghe), which was originally DDIC's main foundry, for wafer production. This has supported its capacity utilization to remain at a high level, and the prices of mature processes have also shown an upward trend. According to TrendForce, the production capacity of eight-inch and some 12-inch mature processes related to DDIC is tight, resulting in an overall increase in wafer costs. It is difficult for DDIC suppliers to absorb it on their own, and the pressure to pass on is gradually emerging.

Product type, application market and customer structure will determine the extent of price increase

DDIC products must go through multiple processes such as gold bumping, packaging, and testing in the back-end. Recently, due to factors such as tight packaging production capacity, increased material prices and labor costs, packaging and testing OEM quotations have been increased, especially for product lines such as COF (Chip-on-Film) and COG (Chip-on-Glass). The cost pressure is more significant. In addition, as international gold prices continue to rise from 2024, the cost of gold bump materials continues to rise. Although some manufacturers have gradually introduced alternative solutions to reduce their dependence on gold materials, it is still difficult to completely offset the pressure caused by rising gold prices in the short term.

TrendForce pointed out that some DDIC suppliers are evaluating the possibility of adjusting their quotations to reflect the impact of rising costs. If the increase in wafer foundry and packaging and testing costs continues, it will increase the probability of DDIC price increases, and the price increase will depend on factors such as product type, application market, and customer structure.

From the perspective of terminal applications, DDIC is used in display products such as TVs, monitors, laptops and smartphones, so cost changes may be gradually transmitted to panel manufacturers and terminal brands. DDIC's quotation adjustment will depend on upstream cost trends, capacity supply and demand, and terminal market demand, which are all currently important observation indicators. (Source: TrendForce)

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