Jiwei.com reported that as early as the second half of 2021, Jiwei.com learned that in the context of the continuous decline in the consumer electronics market, some domestic MCU manufacturers who have just entered the market are not well recognized by customers, and a large number of goods are stored in their stores. In the agent's warehouse, it can't be sold at all.
Today, with the weakening demand in the terminal market, the wave of downstream orders is constantly being staged in the industry, and the upstream fabs are performing very strongly. Consumer MCU manufacturers are not only facing pressures from cost and price wars, but also the inventory backlog. More and more serious, especially in the field of 8-bit MCU, the market is already in a state of flooding.
Under the circumstance of high inventory and market downturn, an executive of a leading domestic MCU manufacturer said that the industry was expected to return to the price reduction cycle next year, but the frozen state of the market in the second half of this year will appear, and the MCU industry will also be reduced from small areas to bargain prices. Inventory has entered a state of large-scale price wars.
Cost pressure is high, and some manufacturers have begun to destock at low prices
In fact, a year ago, the MCU market was still in a state of shortage across the board. Whether it was 8-bit or 32-bit, consumer, industrial-grade and vehicle-grade products were facing huge gaps. Domestic and foreign manufacturers are actively striving for the supply chain. Support, the craziest thing is that in Q1 2021, TSMC will also auction "excess capacity", and the final transaction price is 15%-20% higher than usual. Domestic chip manufacturers are also actively participating in the auction, and some domestic MCU manufacturers have successfully won some production capacity.
However, the downward economic environment has interrupted the stocking demand of terminal manufacturers. Due to the active stocking in the first half of the year, the inventory of major terminal manufacturers is relatively high, while the consumer electronics market including smartphones, laptops, tablets, TVs, wearable devices and other consumer electronics markets Demand has suddenly cooled, and various industries have begun to destock, resulting in a significant slowdown in the momentum of the consumer MCU market in the second half of the year.
Industry insiders pointed out that, in fact, last year's TWS headset crash not only had a fatal blow to the Bluetooth SOC, but also had a considerable impact on many electronic components such as flash, power management chips, TVS diodes, MCUs, and resistance-capacitance senses. Up to now, there are no other applications to fill the vacancy in this market, which has led to the failure of MCU manufacturers who bet on the TWS market in the early stage, and the pressure on inventory has increased sharply. The situation in other consumer electronics fields is roughly the same.
Under this circumstance, since the second half of 2021, the news of MCU selling in the spot market has continued to come. Today, the price drop is not enough to describe the current situation of the MCU market. Except for a few automotive-grade products, with the market The demand has gradually calmed down, and the prices of most MCU products, including ST and NXP, have returned to normal. The products with the most serious price increases before suffered an avalanche-style price drop.
At present, the market competition in the 8-bit MCU field dominated by domestic and Taiwanese companies is already very fierce. Some industry insiders bluntly said that the current 8-bit MCU has begun to flood the market. If the subsequent head manufacturers continue to expand their production capacity, the living space of small and medium-sized MCU manufacturers will be further reduced, and the industry reshuffle will also accelerate.
In terms of 32-bit MCUs, Jiwei.com has learned from various sources in the industry that the inventory backlog in the overall consumer MCU industry is already very serious. In Q2 this year, some brand manufacturers have begun to bargain prices to destock with very aggressive sales strategies, but Q3, Q4 will be the choice of most manufacturers to reduce the price and destock.
Taking Songhan, a Taiwanese MCU manufacturer as an example, the company reflected the cost increase in the product price. Later, the company chose to absorb the cost on its own and the product no longer increased the price. At present, the price reduction of some products has returned to the two consecutive price increases last year. previous level.
Upstream fabs are mulling price increases, and the problem of inventory backlog is difficult to solve
It is worth noting that MCU manufacturers in Taiwan and mainland China are not only facing sluggish market demand and serious price competition, but also cost pressures continue to rise.
According to industry insiders, the current problem faced by domestic MCU manufacturers is that upstream fabs are still raising prices, including TSMC, Hua Hong, SMIC and other manufacturers have price hike plans. In their view, although the demand for consumer electronics is declining, , Some customers have withdrawn their orders, but there are still a large number of customers who are seeking capacity support, especially startups and companies planning to go public. They need performance support to obtain financing, and the company must maintain good production and operations. Therefore, even if the fab price increases, such customers will still pay for it.
In fact, from the current sluggish demand in the entire consumer electronics industry and the successive orders cut by chip manufacturers such as Qualcomm, MediaTek, Novatek, etc., the global foundry industry still maintains a capacity utilization rate close to 100%, which can also be seen.
The author mentioned above that a domestic MCU manufacturer grabbed TSMC's wafer production capacity at a high price. The manufacturer's MCU production has increased significantly, but the market demand has not kept up, resulting in a large accumulation of its inventory products.
"Even if the above-mentioned manufacturers do not currently use the above-mentioned production capacity, they do not dare to cut orders with TSMC, because after cutting the orders, they will not be able to get the production capacity next time." A person familiar with the matter told Jiwei.com. In addition, due to the tight production capacity of the fab, IC design companies can only convert the payment method to prepayment to book production capacity in advance. The prepaid account has been consumed, and the order cannot be cut.
It is worth noting that the above situation is not an isolated case. In the current period, the power of the fab is far higher than that of IC design manufacturers.
Therefore, after the fab is shipped, the original factory has two storage options for the hoarded chips. The first is to accumulate the semi-finished products in the warehouse of the downstream packaging and testing factory, but do not place an order with the packaging and testing factory to complete the packaging. According to the test, due to the small area of the wafer, the original chip factory only needs to pay less storage and storage fees.
Industry insiders pointed out that the above situation is more common in the current industry, because once the finished product is produced to the downstream market, it will be a bigger trouble.
In fact, one or two can be seen from the status of the upstream supply chain. Since 2021, global fabs have been operating at full capacity, and the products produced must require packaging and testing, but since September 2021, domestic Small and medium-sized packaging and testing factories began to experience a decline in orders, and orders fell significantly in the fourth quarter. Since 2022, the decline in the packaging and testing industry prosperity has spread to first-tier manufacturers, including ASE, Changdian Technology, Huatian Technology, and Tongfu Microelectronics. of manufacturers have experienced a decline in capacity utilization, which is inconsistent with the continued shortage of wafer production capacity.
However, it is only a short-term choice as inventory piled on the packaging and testing side. The pressure of inventory and performance has forced some MCU manufacturers to complete packaging and testing and send finished product inventory to agents. The reason is in the agent's warehouse.
write at the end
At present, the upstream fabs are still in a boom cycle. Due to the pressure on business indicators, a large number of start-ups and IPO companies need to seize more wafer production capacity, while the global MCU wafer foundry capacity itself is relatively scarce, mainly concentrated In TSMC, UMC, SMIC, Hua Hong Semiconductor, GF, etc.
Therefore, although the overall consumer-grade MCU market has a very serious inventory backlog, the goods cannot be sold, and the price war has quietly begun, but due to the consideration of subsequent development, major manufacturers cannot decisively cut orders, which will further increase the MCU market. The amount of inventory, the problem of inventory backlog is also more difficult to solve...