Chip price avalanche? The original price of a chip from 200 to 20 is only 6 yuan

The news of "200 yuan to 20 yuan, with a price reduction of more than 80%" was screened in the chip circle and social media yesterday. In fact, the chip was originally sold for only 6 yuan. The high price chip l9369 in 2021 has now dropped to 600 yuan. Many people do not know that it will only cost 13 yuan in 2020.

I didn't expect that the topic of chip price avalanche would also be "hot search", and I didn't expect that the cold market that IC workers have shouted for more than half a year could boil out in this 40 ℃ summer. The people who eat melons are concerned about "will the chip price drop like this affect mobile phones and cars?", Many people may not understand the true meaning behind the avalanche of chip prices after chatting for a long time.

When the soaring mood returns to reason, "avalanche" occurs. This is a far cry from the situation in the past two years when we were looking for chips but could not. One price a day, and all the way up, but the collapse did not happen overnight.

When an avalanche occurs, every snowflake braves the world. Behind the rise and fall of chips are the characteristics of the semiconductor industry and the complex background of the times. It is impossible to see the whole picture only by a group of data. Nowadays, the avalanche of chip "emotional value" has made the price return to rationality. After reading this article, you will understand:

Is the chip price really "avalanche"?

Why did chips soar and plummet?

01

Is the chip price really "avalanche"?

St (st semiconductor) is pleased to mention the media report that the two chips are on the list. The time has been extended from last year to this year, l9369. It is reported that "the market price once rose to about 3500 yuan for a chip, and in 2022, it dropped from the high level to about 600 yuan for a chip, with a price reduction of more than 80%.", And stm32f103c8t6 "in 2021, the price will be maintained at about 200 yuan. At present, the price is only about 20 yuan, only one tenth of the highest price."

The market like a skyscraper seems to be thrilling, but in the eyes of the old driver of the chip, it seems to be nothing more than this. He broke the mystery with one remark: "the model that has dropped to 600 yuan may only have 6 yuan in 2020." At first glance, it is exaggerated and rough, but it is not rough. When the price of a chip drops from 200 yuan to 20 yuan, it is unlikely that its normal price will be lower.

Normal price refers to a price state in which the market is stable and the supply and demand are balanced.

At the end of June this year, we recorded the st plummeting market (for details, please read: the terminal has suffered from high price chips for a long time, and the st plummeted today). In a short period of time from March to June, the stm32f103c8t6 was cut back (the price fell by about half), while the stm32f103rct6, another chip of the same series, fell back to a two digit price from the high of 100 yuan in the first quarter.

Query the historical quotation of a spot market platform. At present, stm32f103c8t6 has been reduced to about 12 yuan, and stm32f103rct6 has been reduced to about 37 yuan. Their normal price is actually lower. The normal price of stm32f103c8t6 is about 6 yuan (August 2020 and before), and the normal price of stm32f103rct6 is about 10 yuan (August 2020 and before). After the price reduction, it is still more than 2-3 times of the normal price. Another chip l9369, from the historical low price of 13 yuan (June 2021 and before), l9369 is still up more than 40 times.

"Avalanche" refers to the sudden sharp drop in commodity market prices, "the drop is more than 80%," only one tenth of the high price ", which is not new to the chip spot market.

As early as the second half of last year, the weak demand and the decline in the market price of related chips had already begun. The high inventory of panels, mobile phones, and laptops was frequently reported. In addition, the demand for mobile phones, which accounted for the majority of chip consumption, was much lower than before, and the spot prices of various chips began to decline steadily;

From the end of last year to the beginning of this year, large manufacturers such as MediaTek, Qualcomm, Samsung, Dell, etc. cut orders one after another, and panel driver ICs all reduced prices. The market price of some mobile phone tddi chip models even fell below the original factory price;

After the outbreak in Shanghai, the decline was even more drastic. In April this year, Ti (Texas Instruments) significantly reduced its demand, accumulated a large amount of inventory, and the market selling mood increased. The price reduction was close to the normal price, blocking the waist, and the diving price drop of 2000 yuan to 350 yuan was not uncommon;

St (st semiconductor), which has long dominated the list, has seen a sharp drop in the price of many general-purpose MCU series since the high price in the second half of last year. Many of them have dropped to near the normal price, and the price of GD MCU, which replaces st MCU, has also dropped... It is no exaggeration to say that in the first half of this year, most of the surging chip prices have been cut.

Since the beginning of this year, the spot market prices of general consumer chips such as DDIC, MCU, power management IC and PA chips have all shown a price reduction trend. Compared with the automobile and industrial control chip markets that maintain high prices next door, the delivery time is often 52 weeks, and the price is maintained at a high price of more than three or four digits (the normal price may be only a dozen to several tens of pieces), which is already a scene of "ice and fire". Therefore, the prices of some chips have returned to a low level, It does not represent the status quo of all chips.

Of course, it is undeniable that chip prices in the spot market can always trigger new splashes when there is a serious mismatch between supply and demand.

02

Why did chips soar and plummet?

To understand why the chip price rises or falls, we must first understand that the price refers to the price of the chip in the spot market.

In the chip distribution system, most large customers are directly supplied by the original chip manufacturer, which is the so-called "ex factory price". For most small and medium-sized customers, they mainly obtain chips through distributors and dealers. The price of this part of chips is what we call the spot market price, and the sharp rise and fall are also reflected in this link.

Then the core question comes: Why did the chip market price soar?

In the past, in the distribution circle of electronic components, there were no more than three reasons for a chip to Soar:

Natural disasters (earthquakes, tsunamis, flash floods, fires, etc.), such as the 2011 Japanese earthquake, the unit price of Murata capacitor increased from 0.00x US dollars to 1 US dollars;

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There is a sudden increase in new demand, such as sharing bicycles and forehead temperature guns during the epidemic.

In the past, there was a large-scale stock preparation triggered by the supply interruption of Huawei in 2019. Then, the chain reaction triggered by the outbreak of COVID-19 in 2020 made the semiconductor industry unexpected. Various "black swan" events such as earthquakes, fires and power outages continued to increase, directly affecting everyone's nerves.

The blockade of the epidemic has directly affected the upstream wafer OEM, sealing and testing and other manufacturing links. Since the fourth quarter of 2020, the prolonged delivery period and endless price increase letters have been the main theme of the market of most electronic components. From AKM, St, NXP to Ti, "more than ten times" and "rising faster than the house price in Shenzhen" have all been staged. Not only foreign IC has risen, but also domestic IC that can be replaced has even been unable to buy due to the rise of raw materials and sealing test costs.

The inventory of dealers is squeezed, and the delivery time of the original factory is long, resulting in high-priced chips. Some terminal manufacturers are eager to ship in order to maintain production capacity, and would rather spend several times the price to buy these chips. In the face of an uncertain future, we all chose to "store grain extensively" in panic. When customers such as automobile, industrial control and medical care who are under great pressure pay for high-priced chips, when the news similar to "the car enterprises increase the price by 800 times to buy chips from the black market" is printed on social media, the atmosphere of chip "skyrocketing" has been formed.

There is a market where the price is more expensive to pay for. Chips in the spot market have become a cash cow. The "favorable weather and favorable environment" have led to a sharp rise in chip prices. On the other hand, the market is chaotic. In addition to dealers, some original factories and downstream terminals are even part of hoarding and speculation.

As for the plummeting market, inflation has become the key word of the global economy in 2021-2022. Without waiting for the release of the capacity of the upstream wafer factory, the downstream demand will be weak first. The first one to bear the brunt is smart phones. In the first quarter of this year alone, the global sales of smart phones dropped by 7%. In the first half of this year, the shipments of smart phone SOC terminals in China dropped as much as 16.9% year-on-year.

The trend of order cutting is coming. In April this year, it was reported that consumer electronic chips "face a 30% sharp order cutting". The pressure to clear inventory came to chip manufacturers and finally came to the spot distribution market. The process of chip price returning to normal was faster than expected. There were four panic sales in the market, and a short-term slump occurred frequently. The tide rose and fell, and the chicken feathers were everywhere.

From the point of view of the spot market, the ice and fire of the downstream application demand are directly linked to the chip market, and the causes that affect the demand are too complex. Therefore, it is normal for the chip price to rise and fall from time to time. What is abnormal is those "emotional values". The price should tend to be rational, and a sudden rise is a misdemeanor.

03

epilogue

The semiconductor industry has its own periodicity. Judging from the soaring price in 2021, from the early single digit price to 200 yuan, the price has now dropped to 20 yuan. The ups and downs are a reflection of the downstream demand changing from prosperity to decline for a period of time, and most general-purpose chips under mature processes have also experienced a cycle from shortage to relief. At the same time, accompanied by structural shortage, the price of automotive and industrial control chips has been rising, and the global automotive industry has not yet got rid of the problem of "core shortage".

The new round of "plummeting" market of chips is strongly on the hot search market. Just like the "high price chip l9369" swiped last year, it can always attract more people who eat melons. The difference is that there are more and more rational voices this time. It is worth affirming that the domestic substitution has also had a certain impact behind it. With engineers' blundering debugging and trial and error, we are gradually reducing our dependence on these overseas brand chips.

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