Affected by the international situation in Russia and Ukraine and the repeated domestic epidemics, chips are not only in short supply, but also in price. The chip business of Samsung and Intel companies has also been affected. Today, there is good news from the chip foundry. On April 11, according to media reports, wafer foundry mature process manufacturers have successively announced that they will not increase the price of mature process foundry in the near future. This also means that this suspension of price increases has terminated the rise in mature process quotations for 6 consecutive quarters since the end of 2020.
In the past year, the mature process chip production capacity is in short supply, wafer foundry quotations have also risen, taking the 8-inch wafer as an example, in 2021, the capacity price of the 8-inch wafer foundry will rise by 20% to 40%, and the 8-inch fab will still be overwhelmed in 2022. In the industry, in addition to signing a long contract, IC design factories have increased prices in the form of "bidding" to obtain wafer foundry capacity, setting a record for the longest continuous increase.
The display driver IC is mainly responsible for driving current or voltage, controlling the screen screen, is an important part of the display panel imaging system, and the display driver IC is highly correlated with the display panel. Under the epidemic, factors such as strong exports, the outbreak of emerging application scenarios, and the transfer of panel production capacity to China have jointly led to a high demand for LED driver ICs. A few days ago, Jichuang North and Fuman Microelectric also announced price increases for LED driver products. In addition, many IC manufacturers have adjusted the price of products.
Jichuang North began to implement from April 1: all LED display driver products including tax prices will be raised by 5% to 20% on the basis of the current price. For the reasons for the increase in product prices, Jichuang North said: Mainly due to the continuous increase in upstream wafer prices in Q1 and Q2 2022, in order to ensure production capacity and supply, the current price is raised.
Fuman Microelectronics is also due to the continuous rise in upstream wafer prices, in order to ensure future continuous supply, and then all LED display driver products tax-inclusive prices increased by 10% on the basis of the current price, which also began to be implemented on April 1.
Stopping the rise does not mean that production capacity is loose
This time, a number of advanced chip foundries announced the suspension of price increases, which is related to the weakening of the demand side of the market such as power management ICs, TDDI, and large-size panel driver ICs for Android mobile phones, and the inventory of such products is still relatively full. However, the suspension of price increases does not mean that the demand in other types of chip markets has decreased.
The industry believes that the end of the rise in mature processes is inseparable from the weakening of demand in the downstream areas mentioned above and the continuous expansion of production capacity, and the weakening demand for large-size panel drive chips, TDDI, and Android mobile phone power management chips has led to an increase in inventory water level and an urgent need for destocking. However, the rise in the quotation of mature process foundry does not mean that the production capacity is loose, of which the supply of 28nm/40nm/55nm/65nm/90nm related to the vehicle is still "very tight".
Growing market uncertainty, such as worsening inflation, has further weakened end-consumer demand, prompting customers to lower their shipment expectations in the second quarter, the sources noted. The source also said that due to the sluggish market sentiment, the price of monitor panels continued to fall, and the price reduction pressure of mobile phone DDI and large-size TV DDI in the second quarter was increasing.
Chinese mainland while undertaking global display panel production capacity, the huge consumer market has also become a strong driving force for the development of display driver chips. The suspension of price increases in mature processes will bring many chain reactions. Analysts believe that one is that the price increase trend of some upstream raw materials will be suppressed; the second is that the price of some downstream products will decline, for example, in September last year, after Apple found TSMC, due to the price increase of TSMC, the cost of Apple has risen, and now the price of some chips has not risen, which will also affect downstream products.
Facing oversupply for mature processes?
In the first half of 2022, the consumer electronics market was affected by the weakening of the economic effect of the home, the epidemic and international tensions, the increase in inflationary pressures, etc., coupled with the entry into the traditional off-season, the demand for related applications such as PCs, laptops, TVs, and smart phones cooled down significantly, and downstream customers have successively revised down this year's shipping targets.
In addition, previous reports by the Nikkei News also show that due to the conflict between Russia and Ukraine and global inflationary pressures, Apple has cut orders for the iPhone 13 and iPhone SE 3 by at least 2 million units each, and the annual order volume of AirPods has been cut by 10 million units. As a result, the demand for industries that account for the bulk of mature processes is under pressure.
Under the trend of large-scale expansion of fabs around the world, concerns about overcapacity have always existed. According to industry analysis, this wave of stop-ups may be adjusted or temporary in a single quarter, but if the degree of contraction of demand due to external factors is too large, it will exceed the new capacity of the entire industry, or it will lead to a cyclical recession. As an LED display company, we should take into account the slowdown in demand, overcapacity and lead to price wars and other issues, so as to take precautions and actively prevent and deal with various risks.
Editorial typography: It's sunny