Chip prices are cut, and chips are slow to sell. The seemingly absurd voice has been clamored by countless people since the first half of this year. In the first half of 2022, due to the sluggish demand in the consumer electronics market, the chip industry once ushered in a wave of price reductions. In the second half of the year, the plot repeated itself.
Recently, CCTV news reported that as the core component of the electronic control system, the STMicroelectronics chip was one of the most in-demand chip products in 2021. It fell to around 600 yuan, a drop of as much as 80%.
Coincidentally, the price of another chip last year was ten times different from this year. The price of chips is comparable to that of pork, rising and falling. The difference between the highest price and the previous normal price is extremely exaggerated. It is reported that the media reported that the STMicroelectronics chip of 600 yuan will only have a normal price of tens of yuan in 2020.
The chip fever seems to have passed. Is the cloud that shrouded the entire technology circle last year about to dissipate? According to Bloomberg, the vast majority of chip companies currently believe that there will be a major turning point in this hot market for a long time to come, and some even pessimistically believe that the semiconductor industry will usher in the worst decline in a decade.
A few are happy, a few are sad, and the chip price is avalanching. In addition to the industry’s silence, I am afraid that there are countless markets in the carnival.
Chip down, but not completely down?
The avalanche of chip prices is inseparable from the downturn in global electronics consumption.
It can be seen from TSMC’s latest financial report that the smartphone business, which once supported half of the country, is no longer the largest source of income, and the proportion of this business is expected to continue to decline. The shipments of smartphones and PCs have not been as good as January since the beginning of this year. According to CINNO Research data, in the first half of 2022, China’s smartphone SoC terminal shipments were about 134 million, down about 16.9% year-on-year.
As for the PC side, according to market research firm Mercury Research, in the second quarter of this year, desktop computer processor shipments fell to the lowest level in nearly 30 years, and total processor shipments experienced the largest year-on-year decline since 1984. South Korea Smartphone sales fell 29.2% year-on-year in July, while exports of computers and auxiliary equipment fell 21.9%, and shipments of memory chips led the decline with a 13.5% decline.
The upstream demand decreases, the downstream continues to cut orders, and the price naturally cools do
However, it should be noted that these chips with reduced prices do not have any generalization effect relative to the entire semiconductor industry. Has the chip really dropped in price? Under the news of a “slump”, there are still manufacturers bucking the trend and announcing price increases. For example, Intel, Qualcomm, Meiman Electronics, Broadcom, etc. plan to raise prices for some of their chip products.
Taking Intel as an example, according to Nikkei, Intel has informed customers that the price of semiconductor products will increase in the second half of 2022. It is expected to increase the price of a wide range of products such as core servers and computer CPU processors and peripheral chips. Depending on the type, the lowest is in the single digits, and the largest increase may reach 10% to 20%.
Is the chip going up or not? It can be said that the price of consumer electronics chips has dropped suddenly due to the decline in demand, but the demand for MCUs in other application fields, such as automobiles and industrial control, has led to the high prices of related chips. From the very beginning of the abnormal mobile phone shipments, the future of the chip industry has been interestingly labeled as slow-selling, but in fact, the chip shortage in some industries has not ended yet.
Especially for automotive chips, data from the 2022 China Nansha International Integrated Circuit Industry Forum shows that current chip products can only meet 31% of the needs of automakers on average. The data given in the month is that GAC faced a shortage of 33,000 chips in the second quarter.
The new energy industry is going smoothly, and the demand for chips in the future should not be underestimated. It is reported that an average car needs to use 500 chips, and new energy vehicles carry more chips. Last year, the global car sales were about 81.05 million, which means that the entire automobile industry chain needs 40.5 billion chips.
In addition, high-end chips are still high above the market altar. On the one hand, the demand for chips with advanced process technology in the upstream industry chain has never subsided. It was previously reported that TSMC’s 3nm chips will be mass-produced in September, and Apple will be the first customer to use TSMC’s 3nm chips.
It is reported that next year, including the new A17 processor and M3 series processors, Apple will use TSMC’s 3nm. On the other hand, there is a shortage of high-process semiconductor equipment, and the output of 3nm and 2nm advanced processes is destined to be low, and there may be a supply gap of 10% to 20% in 2024-2025.
As a result, the price is even less likely to drop. Various signs tell us that chips are falling one after another, and this industry is far from being as simple as it seems.
Consumer chips falling out of favor?
One side died down, and the other side was prosperous.
Consumer electronics chips have gone through the most glorious period in the past two years. With the decline in the level of electronic consumption, they have finally stepped down from the altar. At present, many chip companies are busy shifting their business, from consumer to automotive and engineering fields. TSMC has listed the automotive market as a priority project in the next few years. It is reported that on the mainland side, the automotive business of domestic MCU players such as Zhaoyi Innovation, Zhongying Electronics, and China Micro Semiconductor is also becoming more and more obvious.
Specifically, Zhaoyi’s first vehicle-grade MCU product entered the customer sample test stage in March, and it is expected to achieve mass production this year; Zhongying Electronics is mainly used for the body control MCU part, and it is expected to be taped out in the middle of the year. Back; China Microelectronics showed its determination to develop automotive-grade chips in its prospectus. Its IPO plans to raise 729 million yuan, of which 283 million yuan will be used for automotive-grade chip research and development projects.
This is understandable. After all, the localization rate of domestic automotive computing and control chips is less than 1%, the localization rate of sensors is less than 4%, and the localization rates of power semiconductors, memory, and communications are 8%, 8%, and 3%, respectively. Domestic new energy vehicle manufacturing is on the rise, and the entire smart ecosystem, including autonomous driving, will also consume a lot of semiconductors in the later stage.
And how hard will it be to keep sticking to consumer chips?
Previously, it was reported that Samsung temporarily suspended the purchase of all business units including panels, mobile phones and memory chips, and even many Korean memory manufacturers will take the initiative to cut prices by more than 5% in exchange for sales. Nuvoton Technology, which focuses on consumer electronics, also saw a surge in profit of more than 5.5 times last year, with a net profit of NT$7.27 per share. In April and May this year, the performance became flat, with revenue falling by 2.18% and 3.04% respectively.
One may not explain much, but Wind data shows that as of May 9, 126 semiconductor companies around the world have announced their financial reports for the first quarter of 2022, of which 16 have experienced a year-on-year decline in net profit or even a loss. Consumer chips are rapidly falling out of favor, and automobiles and industrial control have become the next profit-seeking point in the chip market.
But are things really as simple as they seem?
Especially for some domestic chip manufacturers, moving from the consumer electronics field to the automotive field is far more than what the market heat can decide. First of all, domestic chips should have downstream, and the consumption field ranks first, accounting for 27%. Even if you look at the world, the domestic market is also the largest semiconductor market. Data shows that in 2021, semiconductor sales in the Chinese mainland market will reach US$29.62 billion, a year-on-year increase of 58%. It is the world’s largest semiconductor market, accounting for 28.9% of the world’s total semiconductor sales. .
Secondly, the chip industry itself has more profit margins in the fields of smartphones and 5G. Taking TSMC as an example,
TSMC’s shipments account for 70% of the automotive MCU market, but in 2020′s revenue data, the contribution of automotive chips only accounts for 3.31%. By Q1 2022, TSMC’s smartphone and high-performance computing fields will account for 40% and 41% of net revenue, respectively, while IoT, automotive, DCE, and others will only account for 8%, 5%, 3%, and 3%, respectively.
There is less demand, but the profit is still there, and it is a dilemma. This is probably the most troublesome thing in the semiconductor market.
After the boom, consumers carnival?
When the price of chips fluctuates, consumers are the happiest. Mobile phones, cars and even smart home appliances have become the frequently anticipated consumer carnival areas after chip prices are cut, especially mobile phones. Not long after the chip price avalanche, some people shouted on social platforms to buy mobile phones to make money in the second half of this year.
Immediately after that, the price of new energy, the price of electronic products, the price of home appliances… and so on came one after another. However, there is no clear trend as to whether there will be corresponding price reductions in the product chain, but frankly speaking, this wave of chip price reductions will not cause widespread price reductions in the consumer market.
Let’s first look at the most influential mobile phone field. In recent years, mobile phone manufacturers have been raising prices non-stop. The low-end is silent, the high-end is swaggering, and the possibility of price reduction for a while is very low. In addition, the gross profit of domestic mobile phone manufacturers has not been high. Previously, at the Huawei Developer Conference, Yang Haisong, vice president of Huawei’s consumer business software department, said that the profit of Chinese mobile phone manufacturers is poor, and the domestic mobile phone market share is more than half, but only about 10%. profit.
In addition, chips have indeed fallen, but the prices of other components are not so polite, such as sensors and screens. High-end models are becoming more and more mainstream, and mobile phone manufacturers have naturally more stringent requirements on the supply chain. It is reported that OPPO, Xiaomi It once customized exclusive sensors to Sony and Samsung.
As a result, the price of mobile phones does not increase, which is a blessing for consumers.
Looking at new energy, the mainstream chips that have cut prices this time are not in the field of car manufacturing. What’s more, in the first half of the year, the price increase of new energy car manufacturing circles has not been flat, and it has risen again and again. The reasons behind it are not all caused by chips. calamity. The prices of bulk materials are rising, and the prices of nickel, steel, and aluminum, including positive and negative electrodes, are only going up and down, and the cost of batteries remains high. Obviously, these factors cannot be blamed on chips alone.
Of course, it is not impossible to see the chip reflow in the car manufacturing circle. Since this year, the prices of LED light-emitting chips and driver chips have dropped by 30%-40%, which will undoubtedly play a certain role in buffering the subsequent car costs of car owners. .
In addition to smartphones, consumer chips have the greatest impact on smart home devices such as air conditioners and refrigerators. The demand for MCUs for the three major white goods in China is indeed not low, increasing from 570 million in 2017 to more than 700 million in 2022, of which Light air conditioning MCU accounts for more than 60%.
However, the chips used in the smart home field are basically low-end chips with backward manufacturing processes, which are diametrically opposed to advanced manufacturing processes such as 3nm and 7nm, which are generally higher than 28nm or 45nm. You know, these chips are not high in unit price due to their low technical content and wide application.
For home appliance companies, low technology means they can even achieve self-sufficiency. In 2017, Gree’s microelectronics department was established; in 2018, Konka announced the official establishment of the semiconductor technology division; in 2018, Midea announced its entry into chip manufacturing and established Meiren Semiconductor Company. In January 2021, Meiken Semiconductor Technology Co., Ltd. was established. At present, the annual mass production scale of its MCU chips is about 10 million.
According to incomplete statistics, many traditional home appliance companies, including TCL, Konka, Skyworth, and Haier, have already deployed in the semiconductor field. In other words, this field is not restricted by chips at all.
Down, or not down? This chip price cut is more like a false shot, and upstream manufacturers are not happy for the time being, let alone consumers.
Post time: Aug-23-2022