1. Display driver chip

TrendForce, a market research agency, pointed out that in the first half of 2022, the consumer electronics market was affected by the weakening of the home economy, the epidemic, international tensions, and high inflation. Coupled with the traditional off-season, related applications such as PCs, laptops, TVs, smart The demand for mobile phones has dropped significantly.

The display driver chip bears the brunt. According to relevant media reports, under the condition of oversupply, display driver chips suffered successive wave of cuts in the first half of this year, and prices fell significantly. It is reported that Novatek, a display driver chip manufacturer, said at a recent shareholder meeting that the company's product demand has slowed, resulting in an increase in short-term inventory levels. The market situation in the third quarter is uncertain, and the company will adjust the adjustment of inventory and production capacity in the future. In addition, according to recent media reports, some display driver chip manufacturers have significantly reduced the amount of wafer foundry production by as much as 20 to 30 percent.

In addition, it is worth noting that recent news shows that the market reflects that Samsung will suspend external procurement before the end of July, mainly related to terminal products such as TVs, monitors and tablet computers. The supply chain has also been reported simultaneously, and the IC supplied by large IC design factories to Samsung will be greatly reduced by 30% to 40% by the end of July. Small and medium-sized IC design factories are even faced with the dilemma of stopping supply, and the inventory level of IC design factories will rise again in the future.

2. Consumer MCU

In May of this year, according to market price reflections, the prices of consumer MCUs fell to varying degrees. Taking the HT66F004 series of HOLTEK products as an example, the price has dropped from RMB 3 to RMB 1.8 to RMB 2 during normal order scheduling.

Recently, Cai Rongzong, deputy general manager of the business marketing center of Holtek Semiconductor (HOLTEK) in Taiwan, said when talking about MCUs for small household appliances, IC dealers are lowering the prices of consumer MCUs to reduce excess inventory. Cai Rongzong said that the recent decline in consumer MCU prices in mainland China was initiated by IC distributors rather than chip makers themselves. This has started to adversely affect the low-cost MCU market, especially those used in small home appliances.

It is reported that IC distributors in mainland China stocked up on consumer MCUs when prices were high before, and the inventory can be maintained for three to four months. Resellers have recently moved to lower prices for consumer MCUs amid uncertainty about the demand outlook this year.

3. Analog IC

Since the core shortage crisis broke out, the price of analog chips has risen for five consecutive quarters. Recently, according to relevant media reports, the price of analog chips has shown signs of falling.

According to the report, Texas Instruments has informed customers that the imbalance between supply and demand will ease in the second half of this year. There was news in the market that the price of some chips of Texas Instruments "dropped" by 80% in the past two months.

The latest response from Texas Instruments shows that the price has not fallen by 80%. "Sometimes some traders who are not authorized by Texas Instruments will also obtain products from the market and resell them, and the price information may also come from these channels."

According to some media reports, in the spot market, the price of Texas Instruments power management chips has indeed fluctuated, and the price of a certain chip has dropped from the highest point of 45 yuan to about 3 yuan.

In addition, the whereabouts of analog chip prices can also be seen from the changes in the performance of many analog chip manufacturers. According to incomplete statistics from Global Semiconductor Watch, among the 21 A-share analog chip companies in the first quarter of this year, 7 companies experienced a decline in performance, and more than half of the companies experienced a slowdown in performance growth.

According to industry sources, an analog chip manufacturer in Taiwan, China, said that supply and demand are now roughly in balance, and customer demand has indeed declined. Because brand factories have been hesitant one after another, system factories have shrunk their hands and stepped on the brakes when they are worried that the inventory is too high.

4. DRAM and NAND Flash

In addition, DRAM and NAND Flash are also affected. According to global semiconductor observation data, the prices of DRAM and NAND Flash continue to drop.

TrendForce pointed out that despite the peak season effect and the support of DDR5 penetration rate, the DRAM market in the third quarter was still under the negative impact of the conflict between Russia and Ukraine and the weak demand for consumer electronics caused by high inflation. The main reason for the 3-8% drop in DRAM prices is that some product categories such as PCs and smartphones may experience a drop of more than 8%.

In the NAND Flash segment, as the output of Kioxia and Western Digital (WDC) increased month by month, the production capacity was obviously sufficient to meet the increase in demand for bits. However, demand for consumer electronics such as laptops decreased after the epidemic, resulting in a decrease in orders. Under the impact of the epidemic and high inflation, the slow destocking of smartphone brands will lead to an oversupply of the NAND Flash market in the third quarter, which in turn will affect the price drop of 0~5% in the third quarter.

5. The price of some graphics cards has been lower than the retail price

GPU prices have been falling since December last year. According to foreign media reports, in early May this year, the price of AMD's Radeon RX6000 and Nvidia's GeForce RTX30 (both gaming graphics cards), compared with the premium of the suggested retail price, has dropped from 80% higher at the beginning of this year to 20% or less.

In addition, according to a report by technology media Tom's hardware, the average price of graphics cards in May fell by another 15% month-on-month. At present, more than half of AMD and Nvidia graphics cards are priced at or below the suggested retail price. Reports point out that this is much better than seeing double or triple the MSRP last year, or seeing all of the graphics cards sold for less than MSRP over the next few months.

6. The average price of consumer MLCCs may drop by another 3~6%

According to institutional surveys, the significant decline in the demand for end-use consumer products has further caused the demand for consumer MLCCs to decline, and the market inventory continues to rise. At present, the average inventory level of each size has reached more than 90 days. It is estimated that the average price of consumer MLCCs in the second half of the year may drop by 3~6 %.

In terms of prices, from the first quarter of 2021 to the first quarter of 2022, the average annual price of consumer-standard MLCCs will drop by 5~10%. In the second quarter of this year, in order to stimulate customers to increase their willingness to buy goods, they will be lowered again by 3~5%. %, and some low-end consumer MLCC prices have even touched the cost of materials.

Epilogue

With the slowdown in terminal demand, the price of some chips has fallen, and the tide of "lack of cores" is gradually coming to an end. What will be the chip production capacity in the future?

TrendForce said that from the second half of 2022 to 2023, global consumer demand may continue to face downward revision due to high inflation pressure. However, from the perspective of the supply side, the process of wafer foundry expansion is affected by delayed equipment delivery and plant construction. Delayed due to the influence of other factors, the annual growth rate of global wafer foundry capacity in 2023 has converged to 8%.

The agency believes that under the current market conditions of weak consumer demand, the delay in the expansion process has eliminated some concerns about oversupply in 2023, but the shortage of some materials that are still in tight supply may be extended again. It is necessary to rely on the diversified layout of the foundry for each terminal application and each product process to balance the uneven distribution of long and short material resources.

At present, the price and demand of different chips are more and more differentiated in the market. In the face of the continued consumption downturn, manufacturers may quickly adjust their strategies, increase investment in innovation, improve product layout, and adapt resources to market demand to enhance Its own competitiveness opens up new development space.