MediumV Technology Geopolitics & AI21 October 2026, Wednesday
Powerchip raises prices again in legacy memory vacated by AI
Taiwan's Powerchip (PSMC) reported on 21 October that its third-quarter gross margin rose from 28% to 48%. The company is negotiating a further 10–20% increase in logic foundry prices for 2027, arguing that the big memory makers are shifting capacity to HBM.
According to a TrendForce summary dated 22 October, PSMC's third-quarter revenue reached NT$21.3 billion, up 23% on the quarter and 80% on the year. Net profit rose to NT$6.5 billion (about $200 million, according to the Taipei Times), and earnings per share climbed from NT$0.76 to NT$1.38. A year earlier the company posted a loss of NT$2.73 billion in the same quarter. Wafer prices for 8- and 12-inch logic rose 8–10% in the third quarter.
The bottleneck stems from the AI server spending that accelerated in 2026. Chairman Martin Chu says the large memory makers are moving capacity to HBM (high-bandwidth memory, the stacked DRAM used in AI accelerators) and exiting mature products such as DDR3 and DDR4. The company expects to become the world's only producer of legacy DRAM from DDR1 to DDR3, and for these products to live on for another 10–15 years. PSMC is the only foundry outside China making NOR Flash; AI servers use 3–5 times as much NOR Flash as conventional servers.
Capacity for 2027 is already being locked in: 80% of MOSFET and IGBT capacity is committed under extended-term agreements. Capacity for smartphone power management chips is fully used in 2026, and major manufacturers are seeking 2027 slots. The sources differ on one point. The Taipei Times reports an expected 30% price rise this quarter, while TrendForce puts the third-quarter rise in logic wafers at 8–10%. Whether the two figures refer to different product groups could not be verified.
Talay assessment
Bottom line
Powerchip's numbers show AI demand squeezing not only leading-edge processes but also legacy memory and mature nodes. As the big producers move to HBM, pricing power in mature DRAM and power chips is passing to Taiwan's second-tier foundries. With most capacity sold in advance, any new supply shock in this system feeds straight into prices and lead times.
Likely effects
- Auto and industrial electronicsNegative1–6 months
A further 10–20% rise in mature-node and legacy DRAM pricing lifts 2027 input costs for sectors with extended product life cycles.
- Chinese mature-node makersUncertain1–6 months
As Taiwanese foundry capacity fills up under extended-term agreements, unplaced orders may shift to Chinese mature-node producers.
- Smartphone makersNegative1–6 months
With 2026 power management chip capacity fully used, handset makers must secure 2027 capacity at higher prices and on extended contracts.
Possibilities, ranked
- 1Squeeze carries into 202760%
The shift to HBM continues, and price rises in mature DRAM and power chips become entrenched through extended-term agreements.
Watch: Double-digit growth in PSMC's fourth-quarter revenue and new extended-term agreement announcements
- 2Demand softens, rises stay limited25%
AI server demand slows, mild price weakness in DDR3 persists and the 2027 rise settles at the lower end of the range.
Watch: Continued DDR3 price weakness in the fourth quarter
- 3Big makers return15%
The memory giants postpone their exit from mature DRAM, easing supply pressure in legacy products.
Watch: Major memory makers delaying their DDR4 end-of-life schedule
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Gross margin▲ 48%
- 2027 price rise target▲ 10–20%
- 2027 MOSFET/IGBT capacity▲ 80% contracted