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The chip market is changing, with ups and downs

post @ July 18, 2022 09:47 Michael Wilson

TSMC warns customers of "excessive inventory"; sources say Intel will raise chip prices starting in the fall, with a maximum increase of 20%......

 

Main points:

1. SK Hynix has not yet decided whether to change the capital expenditure plan for 2023;
2. Personal computer factories face a slack peak season in the second half of this year, which may lead to price going down in the supply chain of chips;
3. TSMC warns customers of "too much inventory";
4. It is reported that Intel will raise chip prices from this fall, with a maximum increase of 20%;
5. Beijing based Ingenic: NOR Flash products increased by more than 30% in the first quarter;
6. General Administration of Customs of China: The import of integrated circuits in June fell by 8.3% year-on-year;

1.SK Hynix has yet to decide whether to change the capital expenditure plan for 2023

Bloomberg recently reported that with inflation and a weak market where the demand for chips in all fields from smartphones, PCs to servers is facing great uncertainty,  SK Hynix, a major memory chip maker, is considering cutting its 2023 capital spending by about a quarter to 16 trillion won (approximately $12.2 billion).

According to sources, SK Hynix will maintain a capital expenditure of 21 trillion won this year. Of a strong cyclical industry, demand change on either the supply side or the demand side of memory chips can affect the development of the market.

In response to the above rumors, SK Hynix said that "it has not yet decided whether to change its capital expenditure plan for the next year."

2.Personal computer factories face a slack peak season in the second half of this year, which may lead to price going down in the supply chain of chips

Faced with a lackluster peak season in the second half of this year, some personal computer manufacturers have waged a fierce price war, especially in markets where sales are slow such as the Eurozone, the Chinese mainland and North America, in an effort to boost sales. China’s domestic sales are not as good as expected and have seen a drop by 20%-30% compared with the year of 2021, which has got on the nerves of some renowned manufacturers. It is expected that there will be more promotions in the second half of this year, which may lead to price going down in the supply chain of chips.

The Supply Chain pointed out that when renowned brand product manufacturers become active to promote sales, it means that their strategies have changed. The previous two years experienced severe shortage of components and products. As a result, all manufacturers have stocked components and raised inventory. However, with the reversal of market demand, they will give emphasis to reducing inventory, which will start from the slowdown of the downstream ODMs and spread to the upstream enterprises.

The brand product manufacturers said the consumption momentum has definitely disappeared and that the business market has begun getting sluggish. With the consumer market slumping, the e-sports market has also actually turned weak. The launch of new products in the third quarter will provide an observation point. It is expected that there will be further promotion efforts, which will be stronger than before, if the market is not as good as expected.

Once the brand product manufacturers begin promoting sales in the peak season, it means that the supply chain will face greater pressure to lower prices. In the past two years, the manufacturers and system suppliers overbooked due to the shortage of materials. The consequence is being spread upwards. Now manufacturers of panels, processors, memories and ICs have all started to cut prices. It is expected that there may be a new wave of price cuts if sales in the third quarter are poor.

3.TSMC warns customers of "too much inventory"

TSMC said recently that its profit surged more than 76% to a record in the April-June quarter, but also warned that its customers have an "overstock" for the rest of the year and beyond that could hurt the world's largest foundry.

TSMC supplies nearly every major semiconductor maker, such as Apple, Qualcomm, Nvidia and Broadcom. Its earnings are often seen as a key barometer of demand in the broader electronics industry.

Wei Zhejia, the TSMC President, said customers had "taken action" to clear large inventories of chips that were built to cushion the huge uncertainty in the supply chain following the outbreak of the COVID-19 pandemic. That could dent demand for chips, especially those used in consumer electronics.

"We believe this adjustment is justified after two years of pandemic-driven stay-at-home mode," Wei Zhejia said. "We expect it will take several quarters to have the inventory rebalance to healthier levels. We expect several quarters of inventory adjustments through the first half of 2023.”

4.It is reported that Intel will push up chip prices from this fall, with a maximum increase of 20%

According to Japanese media reports, Intel has notified its customers that it will start raising chip prices this fall to reflect rising costs caused by global inflation. The raised prices will cover computer CPUs as well as peripheral ICs, etc. 

According to relevant sources, Intel sells CPUs that are used in main servers and computers. And it also sells chips that are used in Wi-Fi networks.

The percentage of Intel's price increase varies from product to product, and a final decision has not been made yet. But according to relevant sources, the percentage of the price increase for different products could go from single digits to 10%-20%.

Intel pointed out that the company mentioned at its first-quarter earnings briefing that due to inflationary pressures, it will raise the prices of some of its products. And it has begun to notify the customers about the price increase.

5. Beijing based Ingenic: NOR Flash products increased by more than 30% in the first quarter

According to the Beijing-based Ingenic, a technical leader in CPU technologies in China, its NOR flash products increased by more than 30% in the first quarter, and it is expected to maintain a year-on-year growth throughout the year. Its NAND products include 2D NAND the production capacity of which is not large, mainly for automobiles. On the other hand, the production capacity of its fab has begun shrinking, but the product prices have not been adjusted. It is expected that the overall reduced market demand will gradually be transmitted to the fab.

6. General Administration of Customs of China: The import of integrated circuits in June fell by 8.3% year-on-year

According to China's Major Imports by Quantity and Value for June 2022 that was recently released by the General Administration of Customs of China, the country imported 47.66 billion integrated circuits that month, and the import value was equivalent to RMB 240.8 billion, a year-on-year decrease of 8.3% compared with the import volume of 51.98 billion in the same period last year. The amount was basically the same.

In the first half of this year (from January to June), China's integrated circuit imports totaled 312.29 billion, a year-on-year decrease of 10.4%. But the correspondent import value increased by 5.5% compared with the same period last year.

post @ July 18, 2022 09:47 Michael Wilson views(70) comment(0)
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