TSMC recently held a second-quarter performance conference. Although it expressed confidence in the chip industry, it finally concealed that the days ahead may not be so good. Oversupply of chips has emerged, and some American chip companies would even rather pay high liquidated damages to cut orders.
China Taiwan is the world's largest chip production site. In addition to the oversupply of early warning chips that TSMC has hidden, another Taiwanese company, Liji Electric, has given clearer information. Liji Electric said that the order volume of driver chips, CMOS image sensors, special DRAMs and other products it manufactured has significantly reduced, and even orders that have been placed before have been cancelled.
The main customers of chip manufacturing companies in Taiwan are American chip companies, of which 70% of TSMC's revenue comes from American chip companies. The information conveyed by TSMC and Lijichi shows that today's American chips do feel the dilemma caused by the decline in demand.
In fact, American chip companies have experienced sales difficulties, which had already occurred in the first quarter of this year. Due to the sharp decline in sales of 5G mobile phones in the world's largest 5G mobile phone market, Chinese mobile phone companies have significantly reduced their orders for 5G mobile phones. At that time, Chinese mobile phones cut orders of 170 million units, and demand for RF chips plummeted, because the RF chips required for 5G mobile phones are 2-3 times that of 4G mobile phones. In the first quarter, American RF chip companies reported high inventory.
Then recently, there have been news of high inventory in the United States, which has forced leading American analog chip companies to cut prices by nearly 90% for sale. Of course, these American chip companies will not directly admit that their chip inventory is high. However, the statements of chip manufacturing companies such as TSMC and Licensee have undoubtedly revealed the fig leaf of American chips, proving that their chip sales are really in trouble.
In fact, the oversupply of the global chip market is probably more serious than industry insiders expect. This is because the expansion of the global chip market in the past two years has been too fierce. Since the United States took measures on , Huawei in 2019, various economies have expanded their chip production capacity in order to ensure industrial security.
The United States has launched a US$52 billion chip subsidy plan, while Europe has proposed a chip capacity expansion plan of 43 billion euros. There are as many as 86 chip manufacturing projects planned worldwide, and 35 have been completed so far. These chip manufacturing projects will be put into production one after another before the end of this year, and chip production capacity will be further increased.
China is the fastest economy to promote the expansion of chip production capacity. In the past few years, China's chip production capacity has surged from outside the top five in the world to third place, accounting for 15% of the total chip production capacity. With China's chip production capacity opening, China's chip self-sufficiency rate has reached 36% in 2021. The chip imports in the first five months of this year have decreased by 28.3 billion or 11%. China not only significantly reduced chip imports, but also increased chip exports.
Today, China is still the world's largest chip purchaser. In 2021, China purchased more than US$400 billion in chips, accounting for as much as 60% of the global chip market. Nowadays, the global chip supply is oversupply, and US chips account for nearly 50% of the global chip market. In this case, the inventory of US chips may still be digested by China, the world's largest customer.
However, as mentioned above, China is also the economy with the fastest expansion of chip production capacity, and now China's chip production capacity has reached a certain scale, and the self-sufficiency rate has increased significantly. American chips hope that China will have to provide more preferential conditions for digesting inventory. This is also China's confidence. If you can produce chips yourself, you will have more bargaining power.
It can be said that American chips had many conditions attached to them back then, and they would not buy them, and now China's self-developed chips have reached a certain level and even began to export large-scale foreign countries. Only when American chips were in stock were in stock, it lowered its proud head. This can also be said that American chips were shot in the foot.
