The wind direction suddenly changed, and the fabs that were high above began to take the initiative to find customers

Recently, I learned from customers that the fabs that are high above have taken the initiative to find customers. It's not hard to get a fab discount. And Qualcomm, mediatek cut the news of the single only a few days ago.

Did you know how great a fab was not so long ago? To get the production capacity, there must be a relationship. Relationships are not hard enough. The price, not to mention the discount, is not a good price increase. Having capacity is already a matter of the ability of the company's leaders.

If you want to find someone to cooperate, the first sentence first says, I have production capacity. Then the customer's interest comes.

It is not easy to get the production capacity, especially for small and medium-sized enterprises. You'll find that design services companies like GUC have a lot of orders from fab-backed companies, and they're very aggressive. They know that if you want the big brother fab behind me to produce for you, working with me is the only option for you small factories. And customers face harsh conditions only to swallow their voices.

South Korea's Samsung is even more angry, when the production capacity is tight, it directly rejects Chinese customers.

There are signs of changes in wind direction. And Qualcomm MediaTek's single cut is a very iconic event.

Qualcomm cut orders about 15%, MediaTek cut orders about 30%. These days I thought about it for a while, why is Qualcomm less affected than MediaTek?

This is related to market positioning. Qualcomm's market is mainly in the high-end market, while MediaTek is more in the middle and low end. When the global economy is not good, the two markets are affected differently.

The high-end market is less affected by supply and demand. In the low-end market, when the economy is not very good, people's incomes are reduced, and spending will be appropriately reduced. For example, mobile phones change every year, and they become two or three years. This has led to a greater impact on the low-end market. Another point is that the high-end market has a high profit margin and there is room for price reduction. In the low-end market, the space for price reduction is limited. This was mentioned in a previous article.

Observing the law of cutting orders, it will be found that the lower the number of cutting orders, the larger the amount of orders. This is very reasonable.

According to the latest news, the three giants of domestic mobile phones - Xiaomi, OPPO, VIVO have notified suppliers that they will cut about 20% of the orders in the next few seasons. In the PC field, Lenovo, HP, Acer, and Asus have all begun to lower their annual shipping targets, with an average reduction of more than 20%. The direct impact is the decline in chip demand.

I just talked about the impact of the consumer electronics market, and there is another market that I think cannot be ignored for fabs. This is the cryptocurrency market. Don't underestimate this kind of chip, the chip use is very large. Hundreds of chips can be used on a mining machine. And these chips are also advanced processes.

It may only be that apps in mobile phone chips are advanced processes, and one mining machine is equivalent to the chip usage of hundreds of mobile phones. At that time, Bitmain relied on a large number of orders for mining machine chips and directly became the top few large customers of TSMC.

When cryptocurrency prices are high, this market is a very important market for fabs. Recently we have seen the price of the coin fall also very badly. At this time, the mining machine cannot be sold, and the demand for mining machine chips has also decreased.

Fabs love and hate cryptocurrencies. Either it's an emergency, or it's suddenly gone. At a time of tight capacity, the price of cryptocurrencies is strong, resulting in a large demand for chips, and the capacity is vacated, and the cryptocurrency market is also shrinking sharply.

In addition to the sharp reduction in market demand, chip supply is blowing up. Here it is said that middlemen hoard a large number of chips into the market.

A large number of middlemen and system manufacturers who hoard chips have now woken up and are eager to sell their inventory, otherwise they may fall into their hands.

The shortage of goods is closely related to the phenomenon of stockpiling. The more out of stock, the more hoarded. Hoarding goods is a sense of security. When the real supply is sufficient, there is no point in hoarding goods, and it is easy to hit the hand. In the past, when the supply chain was smooth, it made sense for everyone to pursue zero inventory.

Market demand has dropped sharply, and the flow of a large number of hoarded chips into the market is even worse. The fab's lofty position fell to the mortal world in an instant.

The article from the previous days wrote that the process of this change may be slow or instantaneous. It seems that the speed of change is still unexpected.

A year ago I made the idea that we should keep exploding capacity and not worry about overcapacity. In this way, we can take advantage of production capacity and squeeze the profit margins of foreign manufacturers. At the same time, it is also helpful for the domestic chip design industry.

Higher production capacity, higher cost performance, coupled with the trend of domestic substitution, these are our advantages, so that we can first occupy the mature market, and then steadily enter the advanced technology. At present, our share of the foundry market even in mature processes is still too low.

But we have an advantage that the United States doesn't have, which is talent.

Recently saw an anonymous survey in the United States. TSMC is rated a very low score of 2.9 in the United States, and it belongs to employers with very poor reputation. Known as the Protector of the Nation in Taiwan, TSMC is the employer of choice for science and engineering students. And in the United States, it was directly despised. Many foreign netizens criticized its lack of work-life balance, while accusing high-level bureaucrats, old-fashioned, and treating employees like prisoners. Often 24 hours on standby, crazy overtime, etc.

Why is TSMC popular in Taiwan but disliked in the United States?

In fact, Taiwan polytechnic students have fewer employment options. There is no shortage of semiconductor companies in Taiwan, but most of them are called hepatocytes. In contrast, TSMC pays a high salary after all, so graduates still like to work at TSMC.

In the United States, companies such as Google, Microsoft, and Intel are known for their relaxed working environment. Graduates are unlikely to agree with TSMC's management approach.

Therefore, TSMC is doomed to the United States. The reason why semiconductor manufacturing has left the United States is the natural result of economic development.

It's like low-end manufacturing leaving the Pearl River Delta, not wanting to stay. Many bosses in the Pearl River Delta shouted about labor shortage. In fact, the economic development has reached this level, no one is willing to leave the hometown to work to earn thousands of yuan a month in the hometown can earn these, why go to the Pearl River Delta?

Therefore, TSMC's construction of a factory in the United States is not only a matter of funds and costs, but also a matter of people. You can't always take people to the United States yourself. The shift of chip manufacturing to Asia is a natural economic law, and it is difficult to resist the law. Therefore, TSMC's construction of factories in the United States is also difficult, and the progress is very slow.

Looking at the current chip production capacity, it will be difficult for the newly built fabs in the United States to get their costs back. Subsidies are not enough.

When there is a shortage of chips, manufacturers are still willing to build factories in the United States under the temptation of subsidies, but when the existing production capacity is sufficient, who is willing to invest heavily in building factories?

Domestically, everyone has seen the attitude of foreign fabs when production capacity is tight, plus it is not clear when to cut off supply, so in the case of similar conditions, it is still preferential to choose domestic fabs. With the increase of customers, the process of domestic fabs will become more and more mature, after all, the process needs to be constantly run-in and continuously improve the yield. It is undeniable that at present, even in the mature process, we have a gap with advanced fabs, not to mention advanced processes. It's one thing to be able to do it, it's another thing to do it well. But I'm an optimist, and time is on our side.

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