Taiwan's Formosa Plastics will raise prices for electronic-grade hydrofluoric acid (HF) in the third quarter of 2026, according to a July 16 report by Taiwan's Economic Daily News. The company will also raise prices for high-purity isopropyl alcohol (IPA). As demand for cleaning and etching chemicals swells amid increased production of advanced semiconductors, prices for raw materials fluorite, sulfuric acid, and propylene have all risen simultaneously.
Since the magnitude of the price increase has not been disclosed, it's not yet possible to calculate how much of this will be passed through to semiconductor or end-product prices. A harder question than the price revision itself is whether certified supply capacity will keep pace with future demand growth. The capacity to refine chemicals to the purity level usable at wafer fabs and pass customer certification cannot be increased quickly. Formosa Plastics Group's electronic-grade HF capacity expansion won't come online until 2027, meaning a time lag between demand growth and supply capacity increases will persist for the time being.
Price Hikes Driven by Dual Pressure from Rising Demand and Raw Material Costs
According to Economic Daily News, Formosa Plastics will "moderately" adjust electronic-grade HF selling prices in Q3 in response to rising fluorite and sulfuric acid prices. Electronic-grade IPA prices will also reflect the increase in propylene, its raw material. While both chemicals are being repriced in the same period, their raw materials and manufacturing processes differ.
| Chemical | Primary Use in Semiconductor Manufacturing | Main Raw Materials | Current Development |
|---|---|---|---|
| Electronic-grade HF | Wet etching of oxide films, surface treatment, cleaning | Fluorite, sulfuric acid | Formosa Plastics to raise prices in Q3 2026 |
| High-purity IPA | Cleaning and drying of wafers, photomasks, and manufacturing equipment | Propylene | Formosa Plastics to reflect raw material cost increases in selling price |
Formosa Daikin, a joint venture equally owned by Formosa Plastics and Daikin Industries, holds approximately 55% of Taiwan's electronic-grade HF market, according to Economic Daily News. A price revision by a company supplying the majority of the market is likely to become the benchmark for the next round of contracts signed by Taiwan's semiconductor fabs. That said, neither the report nor Formosa Plastics' public disclosures specify the exact magnitude of the increase. Price increase rates reported for anhydrous hydrogen fluoride or electronic-grade HF in other regions cannot be treated as representative of Taiwan's contract prices.
The simultaneous price increases are not solely a result of AI demand. Formosa Plastics cited fluorite and sulfuric acid as reasons for the HF increase, and propylene for IPA. When demand is strong but raw materials are cheap, pricing pressure weakens; when raw materials are expensive but fab utilization is sluggish, passing costs through becomes difficult. In 2026, both factors moved in the same direction.
From a 10-Million-Ton Fluorite Market to Ultra-High-Purity Chemicals
The HF supply chain begins at the mine. When calcium fluoride (CaF2), the main component of acid-grade fluorite, reacts with sulfuric acid (H2SO4), it produces hydrogen fluoride (HF) and calcium sulfate (CaSO4). The basic reaction, as described by the U.S. Environmental Protection Agency, is "CaF2 + H2SO4 → 2HF + CaSO4." For semiconductor applications, metal ions, anions, and particles must be strictly reduced from this base product.
Daikin Industries' semiconductor-grade HF 49%/50% products are tested for over 20 metals including iron, sodium, and potassium, as well as anions such as chlorides and sulfates, and particles. If purity is insufficient, the cleaning solution itself can contaminate wafers and reduce yields. Even though the chemical formula is the same HF, industrial production volume cannot simply be counted as electronic-grade supply volume—this is why.
The upstream supply also leaves little room for slack. The U.S. Geological Survey (USGS) estimated global fluorite mine production in 2025 at 10 million tons, down 1% year-over-year. China accounted for 6 million tons of this, or 60% of the global total. In China, mine remediation efforts and safety inspections halted production at some sites, causing the country's fluorite imports in the first half of 2025 to surge 48% year-over-year to 856,000 tons. Mongolia accounted for 86% of these imports.
On top of the geographic concentration of fluorite supply, sulfuric acid prices have also risen. According to a May 2026 response document filed by China's Shangwei Co., Ltd. with the Shanghai Stock Exchange, Chinese prices for anhydrous hydrogen fluoride (AHF) ranged from RMB 9,000 to 10,600 per ton from 2024 through the first half of 2025, rising to RMB 13,000 by the end of 2025 and to RMB 14,778 by April 2026. This represents a 13.7% increase from year-end to April. The company's analysis also indicates that a 10% movement in AHF raw material prices corresponds to a 10-20% movement in the same direction for G1-G3 grade electronic-grade HF. While this is a disclosure specific to the Chinese market, it illustrates well how rising raw material costs propagate to refined chemicals.
SEMI has noted that because fabs consume large volumes of wet chemicals such as HF, sulfuric acid, and hydrogen peroxide, facilities capable of producing these at the required purity level near new fabs are essential. Having general-purpose chemical plants in remote locations is not sufficient. Only when hazardous materials can be transported safely, meet the quality requirements of each wafer fab, and be supplied continuously does this become true production capacity.
How Far Will AI Chip Production Increases Push Up Chemical Consumption?
Between AI and HF demand lies the actual increase in wafer production. TSMC's 2025 shipments reached 15 million wafers on a 12-inch equivalent basis, up 16.3% from 12.9 million wafers in 2024. Year-end production capacity exceeded 17 million wafers on the same equivalent basis. Processes of 7nm and below accounted for 74% of revenue.
2026 will see further ramp-ups. TSMC's 2nm process, "N2," entered mass production in Q4 2025, and the company expects rapid production increases in 2026. An improved version, N2P, along with A16, which adopts backside power delivery, are also scheduled to begin mass production in the second half of 2026. Multiple phases of 2nm fabs are being prepared in Hsinchu and Kaohsiung. As wafer input for advanced logic increases, the volume of cleaning and etching chemicals procured for each process step will also accumulate.
The memory sector is moving as well. SEMI forecasts global 300mm fab equipment spending in 2026 will reach $133 billion, up 18% year-over-year. Within this, the memory segment will reach $52 billion, up 29%, with 300mm memory production capacity expected to increase to 4.1 million wafers per month. Memory manufacturers are rushing to expand capacity and transition processes in response to high-bandwidth memory (HBM) demand.
Public disclosures do not specify HF consumption per advanced chip or per wafer. Therefore, it's not possible to calculate exactly how many additional tons of demand AI chip production will generate. Nevertheless, the three factors—TSMC's shipment growth, the 2nm ramp-up, and memory capital expenditure—provide the basis for chemical manufacturers' demand growth expectations. Through the ramp-up of advanced logic and HBM production, AI demand is even shaping the procurement plans for wet chemicals that fabs replenish daily.
Even a 13,000-Ton Expansion Won't Close the Time Gap
Formosa Plastics is already moving to expand capacity. According to minutes from an August 2025 board meeting, Formosa Daikin currently has high-purity HF capacity of 26,000 tons per year at its Renwu plant and 13,000 tons per year at the first phase of its Dafa plant, for a combined total of 39,000 tons per year. The plan is to add a second phase at Dafa with an additional 13,000 tons per year, increasing total capacity by 33.3% to 52,000 tons per year. The total investment is NT$1.8 billion, with Formosa Plastics contributing an additional NT$448 million based on its equity stake.
However, according to a schedule published by Formosa Plastics Group in March 2026, the second phase will not come online until 2027—too late for the Q3 2026 price increase. Even once the facility is complete, customer quality evaluation, certification, and confirmation of stable operation remain. As SEMI points out, the "capacity to produce chemicals at the required purity nearby" is not determined by reactor volume alone.
The same time lag is visible for IPA. In May 2026, Tokuyama announced that FTAC, a joint venture with Formosa Plastics, would build a second plant with 30,000 tons per year capacity in Kaohsiung, Taiwan. Commercial operation is scheduled to begin in September 2028. Formosa Plastics Group plans to complete IPA waste liquid recovery facilities sometime in 2026, ahead of this, but supply from recycled products will only increase after passing quality evaluation.
The HF price increase won't necessarily translate directly into higher prices for AI chips, since neither contract ratios nor the proportion of chemical costs within overall chip production costs have been disclosed. On the other hand, if supply is interrupted, cleaning and etching processes cannot continue. The key question is whether the additional 13,000 tons coming online in 2027—once it completes customer certification and reaches stable operation—will be outpaced by production increases from TSMC's 2nm process and memory manufacturers. The answer to that question will determine whether electronic-grade HF remains simply an expensive chemical, or becomes a material constraint on semiconductor production growth.