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Demand determines the market, and the price of chips follows market demand. When the world encountered a shortage of chips, chip prices continued to skyrocket, some people stepped up chip capacity manufacturing, some people hoarded goods, and the market price order was seriously disrupted.
When the chip shortage ended, chip prices began to plummet, and some American companies could not bear it, and grabbed the market in China by cutting prices sharply. Foreign media said: It's late.
The chip market is highly competitive, and there will be different types of chips according to different application scenarios, such as SOC chips, chiplets, analog chips and so on.
Behind each chip type there are many giants participating in the competition, take analog chips, represented by Texas Instruments, ON Semiconductor and ADI and other manufacturers, in the analog chip sales, product development and manufacturing, core IP and other aspects have a head competitive advantage.
Texas Instruments, in particular, is the world's largest manufacturer of analog chips and an American company.
During the core shortage boom, Texas Instruments also joined the price increase team, and the chip parts that could have been obtained for more than a dozen yuan were raised to hundreds of yuan, so Texas Instruments earned a huge profit in revenue.
But chip demand comes and goes quickly, and in the second half of 2022, the chip market began to show weak demand, and the giants' chip inventory piled up, which also led to Texas Instruments handing over poor revenue.
According to Texas Instruments' financial report for the first quarter of 2023, revenue for the quarter was $4.379 billion, down 11% year-on-year, and net profit was $1.708 billion, down 22% year-on-year. Among them, Texas Instruments' most profitable analog chip could not bear it, and its revenue fell 14% year-on-year, contributing only $3.289 billion in revenue.
Chips can't be sold, inventory continues to increase, data shows that Texas Instruments inventory increased from $2.769 billion to $33, inventory days from 157 days to 195 days. If Texas Instruments doesn't want to deal with it anymore, it's going to drink the northwest wind.
So Texas Instruments began to cut prices sharply, in May this year Texas Instruments fully reduced the price of chips in the Chinese market, it is worth mentioning that Texas Instruments' price reduction is different from other manufacturers have a fixed amount, but there is no bottom line.
This means that in order to seize the Chinese market, in order to get more orders from Chinese competitors, Texas Instruments can keep falling, of which analog chips are the hardest hit area for price reductions.
Analog chips are a huge market, the chip is an integrated circuit for analog circuits, compared to digital circuits, analog circuits process continuous signals, such as sound, images, etc. Analog chips are divided into general-purpose analog chips and special analog chips.
Common power management chips on the market belong to general-purpose analog chips, and analog-to-digital converters and signal processing chips are branches of special analog chips.
In the entire analog chip market, Texas Instruments has a rich range of products, with more than 80,000 chip products, which is why Texas Instruments can become the world's largest analog chip production. The domestic analog chip manufacturer Shengbang Co., Ltd. has only more than 4,000 kinds of chip products, and there is still a certain gap.
According to the current situation, will the price reduction of Texas Instruments impact the domestic analog chip market? I am afraid that it is unlikely that some domestic analog chip manufacturers have responded to the price reduction of Texas Instruments, saying that "the price reduction has little impact on the domestic market." ”
This shows that domestic manufacturers are either ready to deal with price reductions, or have great confidence in their own products, and are not worried that Texas Instruments' sudden price reduction will steal the market.
Some foreign media said that Texas Instruments' price reduction is late, China has made a major breakthrough in the field of analog chips, and does not necessarily need to rely on imports to meet demand.
Analog chips do not have much requirements for high-end processes, mature chips can meet most of the chip production, so Chinese manufacturers seize market demand opportunities, deepen core technology, break foreign technology dependence in the entire analog chip category, and emerge many excellent manufacturers.
For example, Unigroup Zhanrui, Allwinner Technology, BGI Gene, China Science and Technology Chuangda, etc. These companies have made significant progress in many fields, with UNISOC in wireless communication chips, Allwinner Technology in smart TV and tablet chips, BGI in biochips and gene sequencing chips, and Zhongke Chuangda in automotive electronic chips and industrial control chips.
Texas Instruments' price reduction action continues, in order to cope with the decline in revenue and profit, Texas Instruments intends to "clear the sale", as for what effect can be achieved, market verification is needed.
Of course, domestic manufacturers cannot be complacent, after all, Texas Instruments is the world's largest analog chip giant, and still has a great competitive advantage. It is believed that after the price reduction of Texas Instruments, it will also make domestic manufacturers realize that building chips cannot stay in the "available" stage, and also need to become "easy to use" in order to truly get the favor of consumers.
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