Overall Wafer Foundry Capacity Utilization Rate under Tolling Businesses and Shipments May Strengthen in Q3, SHFE Tin Prices Edge Up [SMM Tin Morning Brief]

September 2, 2025 SMM Tin Morning Briefing:

Futures: The most-traded SHFE tin contract (SN2510) edged up to 275,000 yuan/mt during the night session before maintaining a fluctuating trend around 274,000 yuan/mt, closing at 274,300 yuan/mt, up 0.2% from the previous trading day.

Macro: (1) According to the latest survey by TrendForce, the overall wafer foundry capacity utilization rate and shipments strengthened in Q2 2025 due to the stockpiling effect triggered by consumption subsidies in the Chinese market, as well as demand for new smartphone, notebook/PC, and server products in H2. This drove the combined revenue of the world's top 10 wafer foundries to over $41.7 billion, a record quarterly increase of 14.6%. In Q3, the main growth momentum for wafer foundries comes from seasonal procurement of new products. Advanced processes are receiving orders for main chips of upcoming new products, with high-priced wafers significantly boosting industry revenue. Mature processes are also supported by peripheral IC orders. The industry's overall capacity utilization rate is expected to rise compared to the previous quarter, driving continued sequential revenue growth. (2) TSMC is considering raising prices for all its high-end process technologies by 5%-10% in 2026 to offset US tariffs, exchange rate fluctuations, and supply chain price pressures. TSMC has communicated the higher 2026 pricing to its foundry partners, including processes such as 5nm/4nm, 3nm, and 2nm. This means major clients of TSMC's high-end processes, such as NVIDIA and Apple, will now need to pay higher costs for chips. (3) Tariffs - ①Trump: India has now proposed reducing tariffs to zero, but it's too late. India should have done this years ago. ②Sources: India plans to lower the goods and services tax on about 175 items. ③Besant: Trump may declare a national housing emergency this fall, with potential measures including exemptions for building materials. Confident the Supreme Court will uphold Trump's tariff policies.

Fundamentals: (1) Supply-side disruptions: Tin ore supply is tightening in major production areas such as Yunnan, with some smelters remaining under maintenance in September (Bullish★). (2) Demand side: PV industry: After the installation rush, tin bar orders for PV in east China declined, with operating rates dropping at some producers. Electronics industry: Electronics end-users in south China entered the off-season, compounded by high tin prices, resulting in strong wait-and-see sentiment and orders meeting only essential needs. Other sectors: Demand remained stable in areas such as tinplate and chemicals, without exceeding expectations.

Spot market: Overall spot market transactions recovered slightly compared to last Friday, with some traders reporting shipments of 10-20 mt. However, given that prices remain high at 270,000 yuan, some downstream and end-users maintain a wait-and-see stance.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should exercise caution in their decision-making and not use it to replace independent judgment. Any decisions made by clients are unrelated to SMM.]