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TrendForce’s latest investigations have revealed that wafer foundry utilization during the second half of 2025 has remained more resilient than anticipated. Several factors are contributing to this, including the postponed U.S. semiconductor tariffs, low inventory at IC vendors, the peak smartphone season, and ongoing high demand for AI. These conditions have prevented the expected decline in capacity utilization.
In fact, some foundries are poised to perform better in 4Q25 than in 3Q25, prompting many industry players to consider increasing prices for specialized process platforms like BCD and power-related nodes.
TrendForce observes that the market's initial anticipation of U.S. semiconductor tariffs for 2H25 coincided with certain consumer electronics, such as TVs, entering their seasonal restocking slowdown, which could lead to a decline in foundry utilization in the fourth quarter. However, since tariffs are still unannounced, IC design houses—who had previously reduced wafer starts—are now replenishing inventories and increasing procurement for upcoming smartphone and PC platforms.
Meanwhile, AI server peripheral ICs continue to drive incremental orders, even taking capacity that was initially allocated for consumer chips. Inventory levels for industrial control chips have also decreased to healthy levels, prompting manufacturers to restart restocking efforts. As a result, foundry utilization in 4Q25 is expected to stay largely consistent with 3Q25, exceeding earlier estimates.
Toward the end of the year, some foundries, particularly in China, where 8-inch capacity remains constrained, are expected to operate at nearly full utilization. In response, Chinese fabs are planning to capitalize on this opportunity by implementing price increases, with some potentially starting as early as Q4 2025. Meanwhile, foundries experiencing strong AI-driven demand for power ICs are preparing for more across-the-board price hikes in 2026.
Although the precise increase is still being negotiated, the move has already fostered a noticeable upward trend in market pricing. While these price movements are not yet widespread across the industry, they indicate that the semiconductor supply chain is temporarily leaving the inventory correction cycle, and aggressive pricing wars in mature nodes are starting to subside.
TrendForce cautions that uncertainty remains, despite foundry utilization in 2H25 performing better than expected. Tariff policies remain unsettled, macroeconomic headwinds persist, and consumer electronics lack significant innovations, leading to longer replacement cycles. These issues could pose risks for 2026. Monitoring will be necessary to determine if the semiconductor supply chain can sustain its current stability.
