Major analog chip manufacturers announced a price increase of 10-20%!
On December 30, it was reported that according to the price increase letter exposed on the Internet, ADI, the world's second largest analog chip manufacturer, which only launched a new round of layoffs in the middle of this month, has recently issued a price increase notice to agents in China, announcing that it will start from February 4 next year to increase prices by 10-20% for some product lines.
In the price increase letter, ADI stated that the company attaches great importance to the reliability of stable component production, so it will not arbitrarily stop discontinuing components within a controllable range, and in order to ensure supply to customers, the company will increase the price of some old product lines to offset the cost pressure of maintaining production.
Taiwanese analog chip manufacturers said that ADI's price increase includes new orders and existing demand, and the price increase will be different for different periods, such as products that have been mass-produced for 20 years will increase by 15%, and products that have been mass-produced for 25 to 30 years will increase by 20%. A more precise magnitude of the price increase has yet to be confirmed.
According to some analysts, ADI will adjust the price of new and old products differently this time, hoping to take advantage of the low inventory in the supply chain to stimulate customers to switch to new products. To a certain extent, ADI's move reflects that the semiconductor market has bottomed out, which may trigger a stocking wave, which should also be good news for domestic semiconductor manufacturers.
However, ADI's latest earnings report for the fourth quarter of fiscal 2023 ended October 28, 2023 shows that the picture is still not optimistic. ADI's revenue for the quarter was $2.716 billion, down 16% year-over-year, with only the automotive segment maintaining growth and all other divisions experiencing double-digit percentage declines.
ADI's revenue and profit forecasts for the first quarter of fiscal 2024 are also in line with market expectations.
Perhaps due to the negative performance impact, ADI recently initiated a new round of layoffs, which will result from the plan to eliminate an additional 350 jobs, which is expected to take effect on January 12, 2024.
ADI noted that customers who have been hit by inflation are no longer placing new chip orders. ADI is planning to reduce inventories by slowing the pace of capacity expansion, which is expected to help reduce ADI's capital expenditures by approximately $500 million in fiscal 2024.
However, ADI's inventory levels are decreasing compared to before. Jim Molika, ADI's chief treasurer, said, "The company's inventory decreased by $70 million in the fourth quarter (sequentially). He added that inventories should continue to decline in the fiscal second quarter.
ADI remains optimistic about the long-term trend of the industry, noting in a November conference call that the company's new design-wins and more mature products will continue to grow year-on-year, and is optimistic about the current state of the industry and the future pricing environment.
Industry insiders also pointed out that ADI has raised prices for old products, showing the company's optimism about the recovery of industrial demand. On the one hand, ADI pushes customers to switch to new products by raising the price of old products, and on the other hand, analog ICs have a relatively long life cycle, and chip factories often increase the price of old products in order to promote and popularize new products and other applications. On the other hand, it also reveals the rebound of downstream demand and confidence in future performance growth.
Since the fourth quarter of this year, with the successive launch of new smartphones and AI PCs that support generative AI, it is expected to stimulate the accelerated recovery of the smartphone and PC markets, which will also directly drive the demand for memory chips, CIS chips and analog chips to rebound.
It is worth noting that under the background of the continuous reduction of production capacity by upstream original factories, memory chips have been rising recently. For example, it is rumored that Samsung has raised the price of NAND Flash chips by 10% to 20% in the fourth quarter, and will increase the price by 20% quarter by quarter in the first and second quarters of next year. Western Digital also issued a price increase notice letter to customers earlier this month, emphasizing that the price of NAND Flash products will be cyclically increased in the coming quarters, and it is expected to increase by 55% cumulatively. Samsung Electronics, a major global CMOS image sensor (CIS) manufacturer, was also revealed in November that it had issued a price increase notice to customers and would significantly increase its CIS product quotation by 25~30% in the first quarter of 2024.
Editor: Xinzhixun-Rogue Sword