Which chips were cut off? Which chips are piled up like mountains?

This year's chip market can be described as a sudden change. On the one hand, affected by a series of factors such as the epidemic and international conflicts, the income of residents has plummeted, and they are more cautious when shopping. Facing the weak market of mobile phones, laptops, home appliances and other terminals, they have to start to reduce prices and inventory. When placing orders for chips, they also tend to calm down, and even cut orders, This is in sharp contrast to the situation of "placing multiple orders for chips" last year.

In addition, recent data shows that in the first five months of this year alone, Chinese enterprises cut orders for chips as high as 28.3 billion pieces. That is to say, due to the demand, the chip inventory of various manufacturers has been overstocked to a certain extent. The market demand for consumer MCU, driver IC, memory chip, passive components and so on is bleak, and there are more and more voices in the industry about "MCU price plummeting", "analog chip avalanche" and so on, Many kinds of chip manufacturers say that the inventory backlog is increasing. Under the current environment, how to eliminate the inventory has become the primary problem that manufacturers need to face. After reading this article, you will understand:

The demand is sluggish, the terminal is cut off, and the mobile phone and laptop manufacturers complain

Chip manufacturers destock, chain reaction in the industrial chain

Lead the whole electronic industry chain

01

Sluggish demand and terminal order cutting

Mobile phone and pen manufacturers complain

According to the data of China Academy of information and communications, from January to may, 108 million mobile phones were shipped in the domestic market, a year-on-year decrease of 27.1%.

Source: China Academy of information technology

In terms of notebook computers, strategy analytics data shows that in the first quarter of 2022, the global shipments of notebook computers dropped by 7% year-on-year, and the market was also bleak. The following are the orders and inventories of some mobile phone and laptop manufacturers:

Apple: cut iPhone 14, chip orders

On July 2, it was reported that Apple had reduced the shipment target of the new generation iPhone 14 by 10%, and the order of A-Series chips to TSMC had shrunk by 10%. Earlier, analyst Guo Mingyu also revealed that Apple had cut off more than 30% of the orders of airpods 3 in the second and third quarters of 2022.

Dell: orders for transmission monitors and laptop panels reduced by 50%

According to the industrial and commercial times, it is reported that Dell urgently notified the panel factory that since July, the orders of monitors and laptop panels in the third quarter have been reduced by 50%, including panel manufacturers such as BOE, LGD, AUA, mass creation, Huaxing optoelectronics and sharp. The supply chain pointed out that Dell purchased 23 million pcs of laptop panels in the first half of this year, but the whole machine shipped 18 million pcs, and the inventory was obviously too high. The monitor panel purchased 20 million pcs, but the whole machine shipped 15 million pcs, and the inventory pressure was high. Therefore, it had to adopt the form of emergency order cutting and give priority to inventory.

Samsung: it is reported that the procurement suspension time will be extended to the end of August

As early as may, it was reported that Samsung might reduce the production of mobile phones by 30 million units this year, from the original planned 310 million units to 280 million units. In terms of panels, Samsung Electronics significantly reduced the total orders of panel manufacturers in March and April to 2.5 million units.

On June 16, Taiwan, China's Economic Daily reported that Samsung's destocking was not as expected. Recently, the supply chain has received notifications from Samsung, and the originally scheduled procurement suspension until the end of July has been postponed to at least the end of August. Some products have decided not to feed again before the end of the year.

LG: reduce the purchase volume of LCD panel

In June, it was reported that LG reduced the purchase volume of LCD panels by about 700000 in the second quarter, and reduced the purchase order of TV panels by 3.2 million with Samsung.

Xiaomi: it is said to reduce the shipment volume in 2022

On May 18, the Nikkei Asia review reported that Xiaomi had informed its suppliers that the estimated annual shipment volume would be reduced from the original 200 million units to about 160-180 million units. In 2021, Xiaomi shipped 191 million smartphones, and this year's estimated shipment is lower than last year.

Vivo and oppo: it is reported that orders were cut by about 20% in the second and third quarters

On May 18, the Nikkei Asia review reported that some suppliers indicated that vivo and oppo would reduce orders by about 20% in the second quarter and the third quarter of 2022 to absorb the excess inventory that currently fills the major retail channels.

Lenovo, Hewlett Packard and Acer: the average rate of decline is more than 20%

In the first quarter of 2022, it was reported that the shipments of notebook computers of Lenovo, HP, Acer and other manufacturers in the first quarter all decreased to varying degrees. In the face of the decline in demand and the increase in inventory, notebook computer manufacturers also began to cut orders. Lenovo, HP, Acer, ASUS and other manufacturers were among them, with an average reduction rate of more than 20%. According to DIGITIMES, Dell, HP, Acer, ASUS Lenovo's average inventory level has risen from 52.7 days in December last year to 62.1 days in March this year, and it is estimated that it will rise to more than 70 days in the fourth quarter.

02

Chip manufacturer destocking

Chain reaction in the industrial chain

The market demand has dropped, the terminal shipment has dropped sharply, the upstream MCU, drive IC, memory chip, 5g chip, CIS (contact image sensor), GPU, CPU, passive components, etc. demand has been affected one after another, and the industry chain has fallen into a domino chain reaction. The domino of the terminal market demand has collapsed first, and the whole supply chain will be affected. Now, The situation of some terminals is in sharp contrast with that of last year:

Last year, the demand was high and there was a shortage of chips. The terminal began to pull goods.

Now the demand is down, and the terminal begins to cut orders, forming a situation that "the terminal was unable to rise in those years, but now the terminal likes to answer but does not care".

Next, let's check the chip inventory of mobile phones, laptops and other terminals:

MCU

In September 2020, MCU represented by St sounded the horn of chip price rising tide. Soon, the global core shortage broke out. By April 2021, the soaring market of MCU core shortage had become white hot, and the price of MCU chip on the spot market had doubled (even tens of times).

Now, with the alleviation of the upstream core shortage and the promotion of domestic substitution, the spot inventory of MCU has been very sufficient, and the market has formed an atmosphere of price reduction and selling. From the inventory of domestic purchasers on July 1, the inventory of MCU is not only very sufficient, but also very large this year (st, Ti, NXP and Gd account for a high proportion).

Source: insight research

Since the beginning of this year, the market price of general-purpose consumer MCUs has continued to decline along with the new round of epidemic. The signs of price speculation have been quickly extinguished by the real (downward) demand, and the problem of oversupply of MCUs has become more prominent. For example, the popular stm32f103rct6 dropped back to the 2-digit price from the high of 100 yuan in the first quarter, and the domestic alternative chip brand GD was sold at a competitive low price. At the same time, the situation of domestic bottom end MCU fighting price war, clearing inventory and seizing market share has become increasingly fierce.

However, the delivery date of high-end MCU is still tight, and the supply of smart cars in emerging markets is in short supply, and the spot price remains high, which brings new opportunities and challenges to the MCU spot market.

Drive IC

In June 2020, the drive IC began to show a shortage signal, and then many manufacturers started the price increase mode. By October 2021, TV, mobile phone and other terminals began to hear the phenomenon that some customers' efforts to pull goods slowed down, and the drive IC was not in full swing.

This year, affected by the downturn of the consumer market, the market demand for mobile phones, laptop computers, home appliances and other consumer goods has continued to decline recently, and the panel price has also dropped sharply, and the inventory of panel driver ICs has also increased. The demand of the terminal for upstream chips mainly depends on the attention of the inventory level. Once the demand drops, the driver IC manufacturers can only reduce the price to remove the inventory. According to cinno research data, in the second quarter of 2022, The price of DDIC, the global display panel driver chip, dropped by about 2% - 8%, and the price drop in the third quarter may continue to expand to 4% - 15%.

It is reported that some drive IC manufacturers have cut the wafer OEM and chip production by as much as 20% - 30%, and the drive IC is also included in Samsung's suspended core purchase order.

storage

At the beginning of 2022, the raw material pollution incident of Western Digital, a large memory chip manufacturer, and the joint venture factory of Kaixia caused a great stir. Subsequently, the relevant manufacturers announced price increases, and micron and qunlian, which were not affected by the incident, followed up one after another, saying that the price increase had temporarily warmed up the memory chip market.

But now, affected by the epidemic, inflation and other factors, the global consumer demand has dropped significantly, and the storage chips at the upstream of the terminal are also facing the situation of reducing prices and destocking. It is understood that the global DRAM revenue season in Q1 of 2022 will decrease by 4%, and the Q3 price is expected to fall by 10%. As for NAND flash, the overall industrial revenue season in Q1 of 2022 will decrease by 2%, and the Q3 price in 2022 is expected to fall by 0-5%.

In addition, according to the flash memory market, South Korea, the world's largest memory chip producer, could not digest the inventory in time due to the drop in terminal demand. In May, the chip inventory of that country surged by 53.4%, the largest increase in four years. In this regard, the flash memory market said that since October last year, the chip inventory in South Korea has been growing year on year. Now, it is inevitable to reduce the price for sale and exchange the price for the quantity.

Samsung is considering to reduce the price of memory chips in the second half of 2022 in order to further expand its market share. Micron also believes that the market demand is weak and the price war is unavoidable. Other manufacturers have only two options: price reduction and loss of performance.

5g chip (mobile phone SOC)

In 2019, the first year of 5g mobile phones was opened. The 5g mobile phone chips of MediaTek, Qualcomm and other manufacturers were rapidly transformed into the seller's market. Their 5g chips increased in several rounds, and the demand was hot. However, since the beginning of 2022, China's mobile phone shipments have accumulated 108 million units from January to may, a year-on-year decrease of 27.1%, including 86.207 million 5g mobile phones, a year-on-year decrease of 20.2%.

Due to the sharp drop in demand, 5g chips in its supply chain have also been forced to cut orders. It is reported that MediaTek has recently cut orders for 5g chips by 30% - 35% in the fourth quarter of 2022, and Qualcomm has also reduced the output of high-end snapdragon 8 series by 10% - 15%. Guo Mingyu of Tianfeng Securities said that judging from the cutting orders of the two big 5g chip dragon heads, the sluggish demand in the terminal market may not be improved until the first quarter of 2023.

CIS chip

The full name of CIS chip is CMOS image sensor, which is a device that converts optical images into electronic signals. It is mainly used in mobile phones, automobiles, security and other fields. In 2019, the demand for mobile phones, automobiles, security and other fields exploded, and the supply of CIS chips exceeded the demand. The voice of price increase from manufacturers in the industrial chain was heard. For example, Samsung, gekewei, BYD, Howell and other manufacturers successively issued CIS price increase notices.

Nowadays, the demand for mobile phones and other terminals has dropped, and CIS chips have also been affected. According to Qunzhi consulting, the current supply and demand of CIS (contact image sensor) is generally in the situation of oversupply, and the manufacturers have a serious inventory backlog. It is reported that the total inventory of the top five CIS suppliers of Chinese Android brands has exceeded 550 million. It is estimated that in the third quarter, the CIS price of 5P / 50m is about US $5.1, a year-on-year decrease of 14%.

CPU、GPU

In the second half of 2020, the PC industry recovered and the demand soared. In the first quarter of 2021, the PC shipments remained strong. According to the data of counterpoint research, in the first quarter of 2021, the global PC shipments increased by 45% year-on-year, reaching 75.6 million units. The core CPU and GPU were also out of stock and the prices rose sharply.

But now, affected by the decline of the market demand for notebook computers, the demand for the core CPU and GPU components in notebook computers is weak, and the manufacturers have cut orders seriously, and the price has also started a downward trend. It is reported that the price of GPU has dropped by 57% on average since the beginning of 2022.

Amd cut orders for 7Nm and 6nm process CPU and GPU chips from the fourth quarter of this year to the first quarter of next year, with a scale of about 20000 wafers; NVIDIA's next generation RTX 40 series GPU using 5nm technology was originally planned to be released in September this year, but now it may be delayed until 2023. The delayed release means that TSMC and other OEM factories cannot get the latest orders. From another perspective, it is also a cut-off; Intel also cut the price of alder Lake CPU of its main PC brand by 10% in the second quarter, and is ready to cut its new generation processor (including core i5 and Core i7 chips) by another 5%.

PA chip

After Huawei's mobile phone business was sanctioned that year, the market gap of China's high-end flagship phones expanded, and various manufacturers invested in this circuit one after another, which also increased the inventory of electronic components such as RF PA chips. Later, when the shortage of core came, many mobile phone customers began to panic and stock up, and the price of RF chips began to rise.

By the fourth quarter of 2021, the demand for mobile phones has dropped, the industrial chain is facing inventory adjustment, and the RF PA manufacturers have also entered the stage of buying and selling. According to the information of jiwei.com on May 30, the inventory level of PA chips is high, while the capacity of upstream GaAs OEM plants such as Wenmao and hongjieke has also dropped repeatedly to the freezing point.

Passive element

In the second half of 2019, MLCC and other passive components showed signs of "tight supply and increased prices". Once the news was released, it quickly spread to the market. At the beginning of 2020, MLCC had a significant rise, but in the second half of 2021, MLCC entered a state of price decline. Now the price decline has lasted for nearly a year, and the current market demand is still weak. According to the information of jiwei.com, MLCC of all terminals, original manufacturers and channel providers is still in a state of de inventory, The supply-demand relationship is difficult to reverse in the short term, and the price is low. "The prices of channel providers will not fall any more, and if they do, they will not earn any money."

It is understood that at present, the inventory of MLCC manufacturers is mostly between 1.5 and 2.5 months, but the inventory of some downstream agents has reached 4 months. Previously, it was expected that it would return to the healthy inventory level in August, but now it is reported that it may be delayed until September. Some institutions predict that the demand for consumer MLCC will continue to weaken in the second half of 2022, and the price is expected to fall by 3% - 6%. In general, It is almost certain that the passive components will not prosper during the peak season in the third quarter of this year.

03

Lead the whole electronic industry chain

The terminal demand is sluggish, the reduction of shipment volume and chip orders will directly affect its upstream chip manufacturers, and the decrease of chip manufacturers' orders will also affect the amount of chips they put into the OEM. The whole industrial chain is in a state of "pulling one hair and affecting the whole body".

At present, the terminal manufacturers who cut orders are mainly concentrated in the field of consumer electronics such as mobile phones and mobile phones. It is important to know that mobile phones and mobile phones and other consumer electronics need to consume a large number of chips. According to the data released by IC insights, mobile phones and mobile phones will account for 74.7% of the chip market in 2020, which is also a significant increase in mobile phones and mobile phones