"The Daily of Sci-Tech Innovation Board" reported on June 27th (Reporter: Guo Hui) that "our AI-related power supply orders are 'overflowing', and we simply can't keep up with them now." Recently, a chip manufacturer told the reporter of "The Daily of Sci-Tech Innovation Board" that due to the surge in power consumption of AI computing clusters, power semiconductors are becoming a new growth engine for the industry after storage, and the industry is experiencing another round of price hikes.
Recently, Yangjie Technology and Hongwei Technology, two power semiconductor companies, issued a price adjustment notification letter, marking the second round of price adjustments for these two companies within the year.
The reporter of "Kechuangban Daily" noticed that this year, overseas leading companies generally implemented two rounds of price increases, while domestic manufacturers adjusted their prices in 2 to 3 batches. In addition to Hongwei Technology and Yangjie Technology, which expanded the scope of price increase categories this year, among domestic manufacturers, power semiconductor companies such as China Resources Microelectronics, Silan Microelectronics, Xinjie Energy, Jiejie Microelectronics, and Liang Microelectronics also released price adjustment information with different degrees this year.
Industry insiders indicate that the industry is experiencing a phased price adjustment rhythm, with the core reason being the gradual manifestation of cost pressures. Several industry insiders predict that this current cost-driven price hike cycle will continue for some time, and the industry will accelerate the clearance of low-end production capacity for power devices. Market share will be concentrated among leading chip companies that possess full IDM capabilities or have deep ties with upstream suppliers, and are involved in high-growth sectors.
Deconstructing the industry's tiered price adjustment: Cost pressures emerge in stages within the year
Wang Zhou, an investor in the semiconductor industry and a partner at Zhongke Yingzhi Fund, said in an interview with the "Sci-Tech Innovation Board Daily" that this round of price hikes in the middle of this year is the result of a resonance between the cost side and the demand side. "On the cost side, Infineon stated very directly in the price increase letter sent in May that geopolitical tensions have led to an increase in energy, raw materials, and transportation-related costs, such as significant price increases in copper and gallium, which has led to a sharp increase in the cost pressure on power semiconductors. On the demand side, while AI data center demand exceeded expectations, emerging applications such as intelligent driving, drones, robots, and energy storage also saw growth. ”
Wang Shu, Vice President of Yaoxinwei, further explained to the reporter of "Sci-Tech Innovation Board Daily" the factors driving the cost increase of the power semiconductor industry this year:
Firstly, in the initial round of price adjustments at the beginning of the year, the core driver was the rise in bulk metal prices at the packaging end. Metals such as gold and copper are core consumables in the power device packaging process, accounting for a relatively high proportion of packaging material costs. They were the first to rise due to the impact of global commodity market conditions, directly driving up the production costs of downstream packaging.
In the second round of price adjustments at the end of the first quarter this year, the pressure mainly came from the wafer manufacturing side. Special gases are key raw materials for front-end wafer manufacturing. The temporary shortage on the supply side directly pushed up the manufacturing costs of wafer foundry services. The pressure was transmitted from upstream manufacturing links to downstream design and packaging and testing enterprises, driving the second round of cost-driven price adjustments in the industry.
Regarding the mid-year price hikes, on one hand, the rapid growth of the AI computing power industry has driven up the demand for related metal materials, and the rigid constraints on the supply side have further pushed up material prices. On the other hand, the computing power scenario itself has also become a new growth pole for demand for power devices, and the demand side has further strengthened the price transmission momentum.
The industry is experiencing a phased price adjustment rhythm, primarily due to the gradual emergence of cost pressures. Wang Shu explained that price fluctuations of raw materials in different links do not occur simultaneously. There is a time lag from the increase in upstream raw material prices to their transmission to the cost side of component manufacturers, and then to the enterprises' evaluation of price adjustment strategies and their transmission to the downstream. Additionally, enterprises also consider the acceptance of downstream customers, gradually absorbing cost pressures through phased price adjustments to avoid a significant impact on the downstream caused by a one-time substantial price adjustment. Therefore, a stepped price adjustment rhythm emerges.
On the demand side, reporters from "Kechuangban Daily" learned through interviews that there is a clear differentiation in demand across different terminals, with AI data centers becoming the core growth driver for power semiconductor terminal applications. Meanwhile, due to differences in the competitive positions of manufacturers and the progress of product verification and introduction, their perceptions of changes in industry demand vary.
"Our AI-related power supply orders are 'overflowing', and we simply can't keep up with the orders now." A person from a power semiconductor manufacturer told the reporter of "Kechuangban Daily" that currently, there are few domestic enterprises capable of mass producing power supplies for AI chips, and the mainstream solutions in the industry are still mainly based on overseas chips. "Because our company is one of the few domestic manufacturers with mass production capabilities, whether it's for primary power supplies such as 800V HVDC for data centers or secondary power supplies for servers, we have entered the supply chains of many leading customers and achieved mass production, so the demand for orders is very strong.". ”
Wang Shu stated that, from the perspective of downstream applications, AI computing power, new energy vehicles, energy storage, and high-end industrial control are the downstream sectors with the highest price elasticity; whereas mature applications such as consumer electronics, white goods, and general motor power supplies have weaker price elasticity.
A person from the securities department of Silan Microelectronics stated in an interview with the "Science and Technology Innovation Board Daily" that most power semiconductor companies have increased the prices of their products this year, and the core driver still comes from cost pressure. However, regarding demand, the person mentioned that aside from AI, there has not been much change in demand in the industrial and automotive sectors for the time being.
Power semiconductor manufacturing capacity is at full load, and SiC is expected to see a reversal in price trend this year
The reporter of "Sci-Tech Innovation Board Daily" noticed that in the manufacturing process of power semiconductors, there has been a continuous situation of full capacity and supply shortage.
With the announcement of new price increases, there are reports in the market that some manufacturers have orders scheduled until 2027. The aforementioned power semiconductor industry insider stated that typically, leading customers in industries such as automotive would not place long-term orders for 2027, but they would indeed provide suppliers with expected pickup volumes for the coming year, allowing upstream manufacturers to arrange their production plans based on anticipated demand.
In terms of domestic wafer fabs specializing in power devices, Hua Hong Hongli achieved an average capacity utilization rate of 106.1% for the entire year of 2025. While its capacity rapidly ramped up in the first quarter of this year, its capacity utilization rate remained high. Regarding the progress of capacity release, Hua Hong Hongli's Fab9 has been ramping up its capacity since last year, and it is expected to complete capacity allocation in the third quarter of this year and will soon reach full capacity.
Xinlian Integrated has also reached full capacity, maintaining a high capacity utilization rate in the first quarter of this year. Due to robust demand and rising raw material prices, the company has implemented a new pricing system for its 8-inch MOSFET product line since January this year. Regarding its expansion plans, Xinlian Integrated stated that it will arrange capital expenditures based on market conditions and changes in customer demand. In the future, its production capacity will focus on three major directions: 8-inch silicon carbide, 12-inch production lines related to analog ICs and MCUs, and power module packaging.
In terms of price increases, domestic manufacturers have generally followed the pace set by leading overseas manufacturers in their pricing strategies for various power semiconductor products. However, when it comes to silicon carbide specifically, competition in the domestic market remains fierce, and price increases have not been evident.
A representative from San'an Optoelectronics revealed to the reporter of "Kechuangban Daily" that the current real situation in the industry is that there has been no price increase for domestic silicon carbide power semiconductors, and it can only be said that the current price has "stopped falling and stabilized". Another IDM semiconductor manufacturer also stated, "The downstream customers of domestic silicon carbide are very competitive, and the price pressure on us is very high."
Wang Zhou stated that, apart from silicon carbide, products such as high-voltage MOSFETs and IGBTs have exhibited considerable price elasticity, and there may still be potential for price increases in the latter half of this year.
"However, silicon carbide has shown a reversal trend this year," said Wang Zhou. Both conductive substrates and semi-insulating substrate materials in the upstream of silicon carbide have seen a year-on-year increase of 50% or even more. As Infineon clearly stated in its price increase letter, the demand for silicon carbide devices has experienced explosive growth, with high-end categories such as SiC modules, automotive-grade, and high-voltage modules seeing an increase of more than 15%.
Strong willingness to absorb price increases in high-growth sectors drives the industry towards "value competition"
"We have been reluctant to publicize recently, fearing that market investors may misunderstand the increase in our company's costs and the price adjustments we have made to our customers," a representative from a power semiconductor manufacturer declined an interview with the reporter from "Kechuangban Daily".
The reporter of "Kechuangban Daily" noticed that in articles and comments on investor communication platforms, there were views suggesting that rising costs may squeeze the profits of power chip manufacturers.
To what extent will the introduction of the price increase policy impact semiconductor companies themselves?
Regarding this, a power semiconductor industry insider stated, "Whether costs will squeeze profit margins depends crucially on whether the increase in costs can be smoothly transmitted to the downstream. For example, in the market for some AI server power supply products, the core contradiction is no longer the level of price, but whether supply can keep up and whether price transmission is smooth. However, the situation in consumer electronics this year has been quite bleak. ”
Wang Shu, Vice President of Yaoxinwei, further stated that the willingness of downstream customers to accept price increases is significantly differentiated overall, and its core depends on the prosperity of downstream industries. The main customers with a strong willingness to accept are the top customers in high-prosperity industries, such as AI power supply, new energy vehicles, and top energy storage enterprises. For these customers, the priority of ensuring the stability of the supply chain is far higher than the small fluctuations in device prices. Coupled with their positive end-user demand and cost transmission space, they have a high acceptance of price increases within a reasonable range, and most of them can smoothly accept them.
"Customers who are highly price-sensitive and prone to adopting a wait-and-see attitude mainly belong to sectors such as consumer electronics, home appliances, and general motor power supplies," said Wang Shu. These industries themselves face weak end-user demand, and enterprises are under significant profit pressure. They are highly sensitive to fluctuations in raw material prices. When faced with price increases, they often adopt a wait-and-see approach, reduce procurement, or switch to suppliers with more price advantages. This segment of the market presents the greatest resistance to price increases.
Wang Shu told the reporter of "Kechuangban Daily" that the current round of collective price adjustments by domestic power manufacturers is essentially a joint response of the industry to cost pressures. From a medium- to long-term perspective, it will have three profound impacts on the industry competition landscape:
Firstly, it will temporarily alleviate the cut-throat competition at low prices and accelerate the elimination of outdated production capacity. Over the past few years, the industry has witnessed a rapid expansion of low-end and mid-range production capacity, leading to a continuous price war and a large number of enterprises operating at meager profits or even losses. The current round of cost increases across the entire industry chain has directly compressed the space for low-price competition. Small and medium-sized enterprises (SMEs) that lack cost control capabilities, possess no core technologies, and focus on low-end products will face the dual pressures of rising costs and weak demand, leading to continuously increasing operational pressures and a noticeably accelerated pace of industry consolidation.
Secondly, industry share continues to concentrate towards the top players. On the one hand, leading manufacturers enjoy economies of scale, which gives them stronger bargaining power in upstream supply chains and enables them to better hedge against cost pressures. On the other hand, most of them have made advance layouts in high-value-added sectors such as automotive regulations and AI, resulting in a more optimized product structure and smoother price transmission. As small and medium-sized enterprises (SMEs) face pressure and withdraw, leading companies will take on more market share, further strengthening the trend of industry concentration.
Thirdly, we should promote the shift of competition logic from "price competition" to "value competition". The model of solely relying on low prices to seize the market is becoming increasingly unsustainable. Enterprises will be more inclined to increase R&D investment, upgrade product mix, and transition to high value-added sectors, thereby enhancing the overall development quality of the industry.
Which chip companies are benefiting from price hikes?
As the industry enters the cost transmission cycle, the market continues to pay attention to which companies can deliver performance growth through price increases.
Wang Shu believes that two types of enterprises can fully enjoy the benefits of this round of price hikes. One is enterprises with high-end product structures and deeply tied to high-growth industries, which have support on the demand side, smooth price transmission, and the greatest profit elasticity. The other is design companies or IDM enterprises with strong control over the supply chain and deeply tied to upstream wafer fabs, which experience minimal cost fluctuations and can convert more of the revenue increase brought by price hikes into profits. ”
Shilan Microelectronics told the reporter of "Kechuangban Daily" that the company operates in an IDM (Integrated Device Manufacturing) mode, with a wide range of product categories. Its pricing logic differs from that of the foundry mode, and it has full control over the entire chain from design, manufacturing to packaging. Therefore, it has a stronger ability to cope with cost increases compared to foundry enterprises.
In the report on China Resources Microelectronics released by Goldman Sachs in June this year, the target price for China Resources Microelectronics was significantly raised. Thanks to the support of the IDM business model for operational efficiency, Goldman Sachs lowered its expectations for China Resources Microelectronics' operating expense ratio for the next two years and raised its revenue expectations. Goldman Sachs believes that the price increase announced by China Resources Microelectronics in February this year reflects that the power semiconductor supply chain is benefiting from the growth in end-user demand brought by AI data centers. It is expected that if AI-related end-user demand continues to strengthen, China Resources Microelectronics' power semiconductor shipments or ASP may further exceed expectations.
However, regarding whether domestic IDM-mode power chip enterprises can continue to improve their gross profit margin and profitability in the future, Wang Shu believes that specific judgments need to be made based on the product mix.
"For IDM enterprises with high-quality product structure and sustained high capacity utilization, on the one hand, the impact on the cost side can be partially absorbed through internal operations, resulting in a cost increase lower than the industry average; on the other hand, the product side follows industry price adjustments, and the revenue side increases with prices, which, combined with the scale effect to dilute fixed costs, will indeed lead to a clear recovery in gross profit margin," said Wang Shu. However, if the products of IDM enterprises are concentrated in the mid-to-low end and the capacity utilization is insufficient, the demand side lacks support, making it difficult to implement price increases. The logic of gross profit margin recovery becomes difficult to establish. The core lies in the matching degree between product structure and market demand.
What are the characteristics and differences between the current round of power semiconductor price hikes, which are centered on the demand for AI servers, and the shortage of automotive chips in 2021? Will it lead to a repeat of the market situation?
Wang Zhou, a partner at Zhongke Yingzhi Fund, told the reporter of "Kechuangban Daily" that on the demand side, high-end products and AI-related categories have seen greater growth, with differentiation between high-end and low-end products. "This is not exactly the same as the situation in 2021 when almost all categories were out of stock and prices generally rose. Therefore, the market situation in 2021 will not simply repeat itself."
Wang Shu stated that this round of price hikes generally presents a pattern of structural price increases with overall stable supply and demand. After several years of expansion, the industry's overall production capacity has seen an abundant supply of mid-to-low-end production capacity, and there is no basis for a widespread industry-wide shortage. It is expected that there will not be a large-scale industry-wide shortage like that experienced in 2021.
Regarding the sustainability of price increases, Wang Shu believes that the cost pressure from upstream raw materials and wafer manufacturing is not expected to subside rapidly in the short term, which will provide a certain level of bottom support for device prices. Therefore, price increases will not be a short-term pulse market, but will maintain a conduction cycle for some time.