Samsung, SK Hynix Plan to Ask Substrate Suppliers for Price Cut in Second Half, Considering Rolling Back Earlier 3% to 4% Increase

BlockBeats News, July 1st. Samsung Electronics and SK Hynix are currently in negotiations with upstream substrate suppliers regarding the delivery price in the second half of the year. They are leaning towards lowering the price, even considering retracting the earlier implemented 3% to 4% average increase. In response to the sharp rise in raw material costs such as gold and copper earlier this year, the two major chip manufacturers agreed to raise the substrate supply unit price. However, as raw material prices have stabilized, the negotiation power has shifted towards the buyers. An Youngwoo, Secretary-General of the Korea PCB and Semiconductor Packaging Industry Association, revealed that most substrate companies have received clear demands for price reduction from customers. If the price reduction is implemented, the first-quarter increase will be completely reversed. The substrate industry is expected to face a price reduction as early as next month. Substrate manufacturers will face a "double dilemma"—while raw material procurement costs remain high, delivery prices are facing downward pressure, squeezing profit margins from both ends, which may constrain capital expenditure and next-generation technology research and development.

This price reduction pressure is particularly severe for medium-sized substrate companies. Many medium-sized companies are currently not covered by the raw material cost linkage mechanism—this mechanism was originally intended to reasonably distribute price fluctuation risks among various parties in the supply chain, but these companies are still outside of it. The KPCA pointed out that the substrate industry is highly sensitive to raw material prices. If the cost burden is disproportionately concentrated on substrate plants, it will directly weaken investment capacity and erode technological competitiveness. The association has explicitly called on semiconductor manufacturers to postpone price reductions and extend the economic cycle benefits to the upstream of the supply chain. It has proposed a series of systematic suggestions: to expand the delivery price linkage mechanism from large enterprises to medium-sized enterprises, establish a government and industry-participated supply chain symbiosis negotiation mechanism, increase policy support for key medium-sized enterprises in the supply chain, and build a cooperative framework to ensure the sustainable competitive advantage of the supply chain.