Chip prices are experiencing a downward trend as chip foundries in China, Taiwan, and South Korea engage in competitive price cuts to retain customers. Chinese wafer foundries' price reductions are influencing the broader semiconductor industry, leading to lower chip prices across the board. This pressure has prompted foundries, including Samsung Foundry, to implement strategic price reductions and engage in negotiations to maintain their client base and orders.
The situation has raised concerns, with the possibility of the US Department of Commerce launching an antidumping investigation if it determines that the Chinese firm's price cuts are disrupting the market. The reasons cited for these industry-wide price cuts include a sluggish semiconductor market and intense competition, with Samsung Foundry reportedly offering cuts of 10% to 15%.
However, amid this market trend, Taiwan Semiconductor Manufacturing Company (TSMC) stands out as a winner due to securing foundry orders from both Nvidia and AMD, despite the overall market slowdown. TSMC is set to manufacture a significant number of chips for these companies using its advanced processes, with Nvidia doubling its orders and AMD's production projected to be substantial.
On a related note, the Wall Street Journal reported that Nvidia is facing resistance to its downgraded AI chips from Chinese clients who prefer more powerful local alternatives, as a response to US export curbs. This has prompted Chinese firms to consider stockpiling Nvidia chips while exploring locally-made alternatives, in anticipation of potential future restrictions from the US Department of Commerce.
Overall, the semiconductor industry is experiencing significant shifts in pricing and competition, with both global and regional implications for chip manufacturers, suppliers, and clients.
