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When the chip market enters 2023, sales demand will be sluggish, and consumers will no longer buy consumer electronic products such as smartphones and computers. Mobile phone manufacturers' shipments have fallen sharply, resulting in difficult business for major American chip giants.
Especially Qualcomm, due to the sluggish performance, Qualcomm had to lay off employees. After that, Qualcomm announced that the chip price cut to clear the inventory, which is unbearable?
Qualcomm is a leading global mobile communications technology company, producing chips that are widely used in smartphones, tablets and other mobile devices. In the Chinese market, Qualcomm chips are used by many mobile phone manufacturers, such as Xiaomi, Huawei, OPPO, vivo and so on.
These mobile phone brands occupy a high market share in the Chinese market, so Qualcomm chips have also become one of the important competitiveness in the Chinese market.
In order to strengthen cooperation with the Chinese market, Qualcomm has established a number of R&D centers in China. In the case of strong chip demand, Qualcomm's layout in the domestic market has brought it great revenue returns.
Every time a new chip is released, it will cause mobile phone manufacturers to rush to buy, in order to fight for the title of the first release, squeeze the head, and even if it is not good, it will be crowned with the title of the first release. Just because the influence of Snapdragon chips is too large, the market proportion is very high, who can grab Qualcomm's chips, who can gain market share.
But now is different, Qualcomm increased chip shipments, customers do not want. The reason is simple, smartphones can not be sold, manufacturers to purchase chips does not make sense, but will increase the inventory crisis.
As early as the first quarter of this year, Qualcomm was affected by the decline in chip demand, in March, Qualcomm laid off 79 employees in San Diego, and in May, Qualcomm announced a global layoff of 5%. In the first quarter of this year alone, Qualcomm's severance package was $285 million.
The layoffs have continued, with Qualcomm laying off another 415 jobs at its San Diego headquarters in June.
In the second quarter of this year, Qualcomm's performance did not improve, with revenue falling 22.7% year-on-year and net profit falling 51.7% year-on-year. As things stand, Qualcomm's layoffs will continue. However, before that, Qualcomm also has an action, that is, chip price reduction to clear inventory.
It is reported that Qualcomm announced the launch of a price war, cutting the price of low-end 5G chips by 10% to 20%, and the price reduction action will continue until the fourth quarter. Generally speaking, Qualcomm will only reduce the price of old chips for more than a year, and now Qualcomm also reduces the price of chip products within half a year.
This shows that Qualcomm has begun to bear it, the current market competition is very fierce, customers from all sides of the chip procurement demand is sluggish, Qualcomm hopes to increase its share of the 5G chip market through price wars, but also to cope with competition from other chip manufacturers.
It's one thing to cut prices, it's another to have anyone buy it. At present, major mobile phone manufacturers are laying out the high-end market, and the low-end mobile phone market is only a foil. In the high-end market, the right to speak is basically in the hands of Huawei and Apple.
Apple has its own A series chips, and Huawei can only purchase Qualcomm 4G processors, which are not within the sales scope of Qualcomm 5G low-end chips. As for other mobile phone manufacturers, market share has plummeted.
According to IDC data, the first domestic smartphone manufacturer in the second quarter of this year is OPPO, with a market share of 17.7%, down 2.1% year-on-year, which is still within the acceptable range. Vivo, which ranked second, lost 11.9% of its market share year-on-year, Honor fell 17.9%, and Xiaomi fell 17.5%.
Only Huawei and Apple have positive year-on-year growth, the key two major mobile phone manufacturers can not contribute to Qualcomm chip price reduction inventory, if the remaining mobile phone manufacturers can not get a sharp increase in sales in the next time, Qualcomm's price war strategy will be invalid.
Mobile phone manufacturers will not buy a large number of chips when the products cannot be sold, and consumers will not pay for unattractive old products. Now there is only one option in front of Qualcomm, and that is to wait.
Waiting for the opportunity for market demand to recover, waiting for the United States to abandon chip restrictions, waiting for phenomenal smartphone products to appear on the market, and then Qualcomm can also win chip orders.
No matter what it is, Qualcomm has to wait, if it forces a price war, dumping chips at low prices, not only can not sell chips, but also cause market rebound, affect the image of Qualcomm chip suppliers, and "cheap" in the minds of consumers.
In fact, Qualcomm has come to this point and is inseparable from the restrictions on American chips, due to the restrictions of the United States on Chinese technology companies such as Huawei, these companies cannot buy chips and other key technologies from American companies, which has a huge impact on the business of American chip companies such as Qualcomm.
And the US chip restrictions also make Chinese manufacturers realize that they cannot rely too much on American chips, so Xiaomi, vivo and other domestic manufacturers have carried out self-developed chip projects, Xiaomi's surging series, vivo V series image chips are enhancing self-developed core scientific and technological strength, do not completely rely on US chip imports.
This has further hit the business of American chip companies such as Qualcomm, and it is not so easy to get chip orders from Chinese manufacturers, which is one of the main reasons for Qualcomm's decline in performance.
The self-developed chip project of Chinese enterprises is still continuing, and Xiaomi announced that it will invest 100 billion yuan in research and development in the next five years, which shows that it has a very strong determination for self-research.
Instead of thinking about chip price cuts and clearing inventory, Qualcomm should think about how to get the United States to give up chip restrictions and return to the global development of chips. Only by solving the problem fundamentally can Qualcomm live a good life.
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