Korean semiconductor substrate manufacturers: Samsung and SK Hynix plan to demand price cuts in the second half of the year, and the 3%~4% price increase at the beginning of the year may be withdrawn.

The South Korean semiconductor substrate industry is facing a new wave of profit pressure. According to reports, Samsung Electronics and SK Hynix are currently negotiating with upstream substrate manufacturers regarding delivery prices for the second half of the year. The semiconductor giants are inclined to lower or even retract the price hikes already implemented at the beginning of the year, making things even harder for medium-sized substrate companies already under pressure.

According to industry insiders cited by Korean media outlet etnews, Samsung Electronics and SK Hynix had raised the average delivery price of semiconductor substrates by approximately 3% to 4% earlier this year, partly in response to substrate manufacturers' demands for price adjustments due to the sharp rise in raw material costs such as gold and copper. However, as raw material prices gradually stabilize, the balance in negotiations has shifted in favor of buyers. An Youngwoo, Secretary-General of the Korea Printed Circuit Board and Semiconductor Packaging Association (KPCA), stated that multiple substrate manufacturers currently in negotiations have received requests from customers to lower delivery prices for the second half of the year. If the price cuts are implemented, the price increases from the first quarter could be completely offset.

Industry insiders worry that this move will put substrate manufacturers in a "double bind"—raw material costs remain high while delivery prices face downward pressure, squeezing profit margins from both ends. If this situation persists, it could limit capital expenditure and investment in next-generation technology research and development within the substrate industry, ultimately affecting overall competitiveness.

The KPCA has spoken out on this matter, calling on semiconductor manufacturers to hold off on price cuts and to promote the establishment of a more sustainable supply chain cooperation mechanism, so that the benefits of the current semiconductor cycle can be shared across the entire supply chain.

Price Cut Pressure: Early-Year Increases Face Full Retraction

According to industry sources, major domestic semiconductor substrate manufacturers in South Korea are currently negotiating with Samsung Electronics and SK Hynix over delivery prices for the second half of the year. Substrate manufacturers are hoping for further price increases, citing that raw material procurement costs for gold and copper remain high, coupled with demand support from the current semiconductor cycle.

However, the semiconductor manufacturers have a completely opposite stance. Since delivery prices were already raised in the first quarter, it is reported that Samsung and SK Hynix are considering bringing prices back to original levels in the second half of the year. An Youngwoo stated that the substrate industry generally expects delivery prices to be lowered as early as next month.

The pressure to cut prices is particularly difficult for medium-sized substrate manufacturers that are not covered by raw material cost adjustment mechanisms. These mechanisms were originally designed to fairly distribute the risk of raw material price fluctuations among supply chain participants, but many medium-sized companies currently remain outside of them.

The KPCA pointed out that the structural characteristics of the substrate industry make it highly sensitive to fluctuations in raw material prices. Once the cost pressure from sudden raw material price hikes falls disproportionately on substrate manufacturers, it directly weakens their investment capacity and ultimately undermines their technological competitiveness. If profit growth slows and further compresses capital expenditure, the R&D progress of next-generation substrate technology will also be affected.

An Youngwoo said that medium-sized substrate companies play a crucial role in South Korea's domestic semiconductor supply chain by connecting large enterprises with SMEs, and are indispensable for maintaining the overall competitiveness of the semiconductor industry. He called on semiconductor manufacturers to include substrate delivery prices as a topic for discussion in building a sustainable and competitive supply chain cooperation.

Industry Appeal: Sharing the Benefits of the Boom, Promoting Collaborative Growth

The core argument of the substrate industry is that during the current semiconductor upcycle, the benefits of the boom should not be enjoyed exclusively by chip manufacturers but should extend to upstream partners such as substrate manufacturers to achieve mutual growth. The KPCA has clearly called for a pause on related price cut demands.

Within the industry, there is also a view that a long-term sustainable cooperation model should be established, allowing substrate manufacturers, who have long borne the pressure of raw material costs, to continuously invest in R&D, capacity expansion, and quality improvement, thereby ensuring the overall resilience of the supply chain.

To address the above situation, the KPCA has put forward a series of specific recommendations: Review and expand the scope of delivery price adjustment mechanisms for medium-sized companies, improve risk-sharing mechanisms to better cope with raw material price fluctuations; promote the establishment of a supply chain cooperation council involving the government, parliament, and industry; increase policy support for key medium-sized companies in the semiconductor supply chain; and build a cooperation framework that ensures the sustainable competitiveness of the supply chain.

The KPCA stated that these measures aim to systematically resolve the structural vulnerabilities of the substrate industry and provide institutional guarantees for the long-term stability of the semiconductor supply chain.

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