Market Insight | Chip stocks continue recent gains, Taiwan Semiconductor may initiate a new round of price negotiations, Hua Hong may raise wafer prices by 10% in the second half of the year

Chip stocks continue recent gains, as of the time of writing, SMIC rose by 3.54% to HKD 18.72; HUA HONG SEMI rose by 3.62% to HKD 24.35; KONTEC rose by 3.61% to HKD 0.086; and SHANGHAI FUDAN rose by 1.63% to HKD 13.72. In terms of news, according to media reports, Taiwan Semiconductor may initiate new price increase negotiations in the second half of the year, mainly targeting 5nm, 3nm, and future 2nm processes, with the decision to raise prices expected to take effect as early as 2025. There are also reports indicating that the price increase for Taiwan Semiconductor's 3nm foundry services may be above 5%, while advanced packaging prices are expected to increase by 10%-20% next year. In addition, some semiconductor industry insiders have stated that the production capacity of wafer fabs such as SMIC and HUA HONG has been at full capacity for several months, with no willingness to negotiate price reductions in the near future. Morgan Stanley recently stated that the utilization rate of HUA HONG's wafer fabs has exceeded 100%, and it is expected that wafer prices may be raised by 10% in the second half of this year. According to institutional tracking, wafer foundry price adjustments have been transmitted to power semiconductor manufacturers, who have experienced a wave of price increases this year