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The world’s two largest contract semiconductor manufacturers are rumored to start increasing prices for their products starting next month. The move has potential to affect financial results of the firms’ largest clients, such as ATI Technologies, Broadcom, NVIDIA Corporation, Texas Instruments (TI) and Xilinx.

Taiwan Semiconductor Manufacturing Company and United Microelectronics Corporation plan to again raise their foundry prices for 0.25-, 0.18- and some of their 0.15-micron process technologies in the second quarter, according to an article at DigiTimes web-site. This is expected to be the second price increase by TMSC and UMC since late 2003, when both chipmakers bolstered wafer costs for their smaller customers. This time large IC design houses will be asked to pay more for wafers.

TSMC and UMC have not announced the actual degree of the price increase, but the source estimated that the increase would be within 10%. TSMC targets its ASPs for 0.18 micron wafers to be in the range of $1000, UMC’s goal is $800-$850. Rising demand for mature processes has eased off the price competition. For instance, Singapore’s Chartered Semiconductor said it expected average selling prices to go up 4-8% in the first quarter and its utilization rates would rise to 81%, DigiTimes claims.

0.25 micron, 0.18 micron and 0.15 micron process technologies are used to build mainstream and entry-level processors for companies like ATI Technologies, Broadcom, NVIDIA Corporation, Texas Instruments (TI) and Xilinx. Even though ATI, NVIDIA and some others aim to build all their volume products using 0.13 micron fabrication processes, at this point 0.15 micron technology is used for chips that are offered for mainstream and low-end hardware that account for a substantial part of the market.

The outcome of price changes at TSMC and UMC will affect fabless semiconductor companies sometime in the second or the third quarter. UMC is said to perform the price increase in April, TSMC had not decided about the timeframes yet, according to the report.

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