Korean semiconductor substrate manufacturers: Samsung and SK Hynix plan to request price reductions in the second half of the year, and the 3%~4% price increase at the beginning of the year may be withdrawn.
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The South Korean semiconductor substrate industry is facing a new round of profit pressure. According to reports, Samsung Electronics and SK Hynix are currently negotiating prices for deliveries with upstream substrate manufacturers for the second half of the year. The semiconductor giants are inclined to suppress or even roll back the price increases made at the beginning of the year, adding further strain to already pressured medium-sized substrate companies.
According to South Korean media etnews, citing industry sources, Samsung Electronics and SK Hynix had raised delivery prices for semiconductor substrates by an average of about 3% to 4% earlier this year, partly responding to price increase requests from substrate makers due to surging costs of gold, copper, and other raw materials. However, as raw material prices are stabilizing, the balance has shifted in favor of buyers. An Youngwoo, Secretary General of the Korea Printed Circuit Association (KPCA), stated that multiple substrate suppliers currently in negotiations have received requests from clients to lower delivery prices for the second half of the year; if the price cuts are implemented, the first-quarter increase may be entirely offset.
Industry insiders are concerned that this move will put substrate manufacturers in a "double dilemma"—raw material costs remain high, while delivery prices are pressured downward, squeezing profits from both ends. If this continues, it may constrain the industry's capital expenditures and investment in next-generation technology R&D, ultimately impacting overall competitiveness.
The KPCA has voiced concerns, calling on semiconductor companies to temporarily halt price reduction measures, and to promote the establishment of a more sustainable supply chain cooperation mechanism to share the current benefits of the semiconductor upcycle across the entire industry chain.
Price Reduction Pressure: Annual Increases at Risk of Being Completely Rolled Back
Industry sources report that major domestic semiconductor substrate manufacturers in South Korea are negotiating delivery prices for the second half of the year with Samsung Electronics and SK Hynix. Substrate firms are hoping for further hikes, citing persistent high procurement costs for gold, copper, and other raw materials, as well as support from current semiconductor cycle demand.
However, the attitude of semiconductor manufacturers is quite the opposite. Since delivery prices had already increased in the first quarter, Samsung and SK Hynix are reportedly considering returning prices to their previous levels for the second half. An Youngwoo noted that the substrate industry generally expects delivery prices to potentially be lowered as early as next month.
For medium-sized substrate companies not included in the raw material cost linkage mechanism, this round of price reduction pressure is especially tough. The cost linkage mechanism is intended to reasonably distribute the risks of raw material price fluctuations across the supply chain, but many mid-sized firms remain outside this system.
KPCA points out that due to the structural characteristics of the substrate industry, it is highly sensitive to raw material price fluctuations. If the pressure from a sharp rise in raw material costs falls disproportionately on substrate makers, their investment capacity will be weakened, ultimately undermining technological competitiveness. If profit growth slows and further compresses capital expenditure space, the development of next-generation substrate technology will also be dragged down.
An Youngwoo noted that medium-sized substrate firms play a critical role in South Korea’s semiconductor supply chain, acting as a bridge between large enterprises and small- and medium-sized enterprises and are indispensable to the overall competitiveness of the semiconductor industry. He calls for semiconductor firms to include substrate delivery prices in cooperative discussions aimed at building a sustainable and competitive supply chain.
Industry Appeal: Sharing the Boom Dividend, Promoting Coordinated Growth
The substrate industry’s core position is that during the current semiconductor upcycle, the dividends should not be enjoyed only by chipmakers, but should extend to upstream partners such as substrate suppliers, achieving shared growth. KPCA explicitly urges that any price reduction requests should be temporarily suspended.
Some in the industry also believe that a long-term, sustainable cooperation model should be promoted so that substrate manufacturers, who have long endured raw material cost pressures, can continue investing in R&D, capacity expansion, and quality improvement, thereby ensuring the overall supply chain’s resilience.
To address the situation, KPCA has put forward several specific suggestions: reviewing and expanding the application scope of the delivery price linkage mechanism for medium-sized companies, improving risk-sharing mechanisms to better cope with raw material price fluctuations; promoting the establishment of a supply chain cooperation council with joint participation of the government, National Assembly, and industry; increasing policy support for critical medium-sized enterprises in the semiconductor supply chain; and building a cooperation framework to ensure the sustainable competitiveness of the supply chain.
KPCA states that these measures are designed to systematically resolve the structural vulnerabilities of the substrate industry at the institutional level, and to provide institutional guarantees for the long-term stability of the semiconductor supply chain.
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