is over halfway through 2022. The topics about Shanghai's unblocking, , the full resumption of work in the Yangtze River Delta, and whether the e-commerce 618 period can bring a wave of stimulation to the Chinese economy have attracted great attention. And just as people are expecting the economy to usher in a recovery, some new changes have emerged in the semiconductor market.
The storm is coming and the wind is filling the building. As early as before June, MediaTek and Qualcomm significantly lowered the chip orders for the second half of 2022, ranging from 10 to 30%. Almost at the same time, Apple and Samsung also corrected their mobile phone shipment targets in 2022, downgrading Apple phones from 240 million units to 220 million units, and Samsung mobile phone from 330 million units to 280 million units. Domestic mobile phones with Android installed on Android systems such as Xiaomi , Oppo, Vivo, Honor, etc. have repaired about 20% of the orders from the supply chain before. The order cuts of
major manufacturers seem to be just an introduction to the "domino" in the semiconductor market. The third quarter was originally the traditional peak season for consumer electronics, but the entire industrial chain showed that the peak season was not prosperous. TSMC's three major customers, Apple, AMD (US Chaowei Semiconductor Company) and Nvidia, rarely cut orders at the same time. Immediately afterwards, some media said that the prices of the top five MCU factories in the world were halved, and MCU has also become another semiconductor product that has dropped prices and cut orders after driver ICs, power management ICs, and CIS sensors. Although MCU prices were strong before, supply was in short supply.
Semiconductor products market situation since the second quarter of 2022
This scene reminds people of the crazy rise in various chip prices after the second quarter of 2020. The semiconductor industry has seen a magical scene of supply and demand imbalance: on the one hand, the price of downstream semiconductor terminals is hyped up by hot money , and a large number of chips are hoarded in the hands of channel merchants; on the other hand, the CEO of the chip company kneeled down to the sales manager of FAB (foundry) to keep the market share and begged for production capacity. Although it is just a rumor, it is a common phenomenon in the industry that chip companies are anxious about not being able to grab production capacity.
Just two years later, the chip market actually had a reversal of demand. The scene of chip prices rising rapidly but still being robbed seems to be a different world.
Semiconductor Structural differentiation of the industrial chain
In fact, it is expected that major electronic manufacturers place orders. One reason is that the economy is slowly recovering in 2021, and the commercial performance of terminal manufacturers in various semiconductor industry chains is generally excellent in January and October. Therefore, by the time the 2022 KPI is planned between November and December, the target will naturally be set at a high level.
However, since the beginning of 2022, the Spring Festival effect (referring to the Spring Festival driving a wave of consumption) has failed, the demand for mobile phones is sluggish, global inflation has led to a decline in consumer purchasing power, unsatisfactory supply of various electronic products, and weak terminal demand. Therefore, the chip inventory in the hands of many IC design companies has changed from hot to hot potato, and some consumer electronics-related chips have also begun to lower prices and seek sales.
The world's fourth largest personal computer brand , Acer , chairman Chen Junsheng pointed out that the semiconductor market has rapidly reversed, and the previous large chip shortage situation has disappeared. Recently, chip suppliers have called, hoping that Acer can buy more ICs, which is very different from the previous chip shortage, when chip manufacturers were short of materials.
Early, we predicted that some companies will lower their shipment goals and performance goals using war or blockade as an excuse, but in fact, through monitoring, it is found that even if these emergencies do not occur, these companies will lower their shipment goals and performance goals. This also indirectly shows that the demand reversal in the semiconductor market is not directly caused by external factors, but is caused by the endogenous changes in the supply and demand relationship of the market.
When observing the changes in semiconductors since the second quarter, we noticed structural differentiation in the semiconductor industry chain. On the one hand, the price reduction of chips in downstream general and consumer electronics fields is relatively obvious.Among them, the price of memory chip began to fall in the second half of 2021, and it is expected that there will be oversupply in the third quarter of 2022; in order to stimulate customers to increase their willingness to pull goods, the price of consumer MLCC (chip multi-layer ceramic capacitor ) has fallen by 3%-5% in the second quarter, and it is expected that the price reduction pressure will be quite large in the second half of the year; general-purpose MCU chips are also facing greater price reduction pressure. At present, the quotations of general-purpose MCU chip manufacturers such as STMicroelectronic , Infineon , Texas Instrument and Texas Instrument have dropped significantly, and the price of general-purpose MCU chips has been lowered from RMB 70 in March to 32 yuan. Generally speaking, the general and consumer electronics fields are greatly affected by the downstream demand of macroeconomic , PCs, mobile phones, etc., and the downward pressure on the industry's prosperity is constantly increasing.
On the other hand, the supply of downstream automotive chips is under pressure to a certain extent. At present, the delivery cycle of automotive IGBTh is 50 weeks or even more, and the supply and demand gap is as high as 40%-50%. At the same time, the delivery period of automotive MCU chips has exceeded 40 weeks, and the delivery pressure is great. In contrast, automotive chip giant STMicroelectronics has once again raised its MCU chip prices, and its order visibility has reached 18 months, far higher than the planned production capacity in 2022. This situation of price increase and order accumulation is also common in the recovery of automobile sales. Therefore, although automotive chips will be subject to certain supply pressure overall, the prosperity of automotive chips is still relatively firm (especially driven by new energy vehicles).
Domestic semiconductor equipment manufacturers should not think that they have stabilized
in mainland China. With the gradual implementation of new production capacity of wafer foundry factories, domestic manufacturers continue to introduce domestic substitution, and the prosperity of the semiconductor equipment field remains high. Since the first quarter of 2022, SMIC , Sun and Moonlight, Shenghejing Micro and other companies have invested in building factories to expand production capacity.
3newsnews in the first quarter of 2022
(Information source: MIR DATABANK)
In recent years, China's semiconductor equipment industry has been in a stage of rapid development, with various new products emerging one after another. Major manufacturers are grasping technological changes and running forward hard, and speeding up production by launching new production lines or new production equipment. Local equipment manufacturers have achieved multi-link mass supply of equipment on the 28nm production line. Some companies such as North Huachuang equipment in silicon etching machines, cleaning machines, etc. have entered the 14nm production line verification and small batch supply. It is expected that the domestic semiconductor industry will still be in a relatively stable growth stage in the next few years (especially the LED lighting industry supported by the state). At that time, domestic semiconductor equipment manufacturers will further develop along the general trend of the industry.
MIR Rui Industry has been paying attention to changes in the semiconductor equipment market in mainland China. In the first quarter of 2022, the overall market of the mainland semiconductor equipment market in mainland China was affected by the increase in equipment procurement volume caused by the continuous construction/expansion of mainland wafer factories and packaging and testing plants, and the orders were very hot. Although from the perspective of delivery, large-scale epidemics in many places across the country in the first quarter had a significant impact on factory production and logistics, but overall controllable, the size of the semiconductor equipment market increased by about 20% year-on-year compared with the first quarter of 2021.
Although domestic equipment manufacturers have made steady progress, it does not mean that they can remain safe and sound under the trend of new changes in downstream demand in the semiconductor industry chain. A simple logic is that although many chip foundries have continued to expand production since the beginning of 2022, in fact, many projects were actually decided a long time ago and were finally implemented in the early 2022, which took a long time. In other words, many expansion projects in 2022 are actually planned in the previous industry cycle.
is generally in a floating cycle in the industry (that is, this cycle since 2022). If major foundries do not have long-term order binding capacity of large customers, they cannot expand and dare not expand. However, as consumer electronics is currently sluggish, the weight of on-board chips is growing, and the semiconductor industry is undergoing structural differentiation, large customers will inevitably be unable to withstand order cutting.The pace of expansion of production of major OEM factories will slow down, and capital expenditure will decline. Although the revenue of upstream domestic equipment factories can maintain the basic market, the growth rate will definitely be lower than expected. This situation is not painful for equipment suppliers who have absolute voice in their respective fields, such as ASML ( lithography machine ), which is in the position of completely monopolizing , or Synopsys Technology (EDA), which is deeply monopolizing. Because this type of manufacturer has mastered the most core technology and keeps up with the development direction of advanced processes, in the future, whether it is 3nm or 2nm, the equipment of these manufacturers must be used, and there are no substitutes, so naturally their bargaining power will be very high.
However, for Chinese local equipment suppliers, they started late, so they rushed to take advantage of the hottest semiconductors and the crazy expansion of production to develop vigorously, gradually realize domestic substitution, and solve a series of stubborn problems. This is a pie that later entrants can get in the context of strong industry demand, although it is a relatively rare type (even so, domestic semiconductor equipment manufacturers have made certain progress).
Now the demand for semiconductors has reversed. With the trend of order cuts from end customers, the knife edge will inevitably affect semiconductor equipment manufacturers, especially local semiconductor equipment manufacturers. Let’s make the worst plan: if this wave of consumption sluggishness lasts for a long time, it will inevitably affect the demand of other traditional industries downstream of semiconductors, then we can expect that the trend of terminal manufacturers’ order cuts will continue. Once this momentum continues until all the expansion projects set by various foundry factories in the previous cycle are completed, it will be a disaster for domestic semiconductor equipment manufacturers.
throw away the fantasy and prepare to fight
chip market is actually in line with the development of the global economic environment ( inflation + slowdown in economic growth). This "stagflation" environment first affected the commodity (raw materials) market, setting off a wave of rising raw materials prices, and then the leverage , which increased the price, gradually pressed towards the middle and lower reaches of major industrial chains in the manufacturing industry. However, the semiconductor industry has been in a recovery period in the past two years (the trough period has been completed from the fourth quarter of 2018 to the second quarter of 2020, and the recovery period has started from the first half of 2020), so it is not significantly affected by the overall economic environment.
Global semiconductor sales in the quarter and global semiconductor equipment sales in the quarter year-on-year
In addition to being in the overall economic cycle, the semiconductor industry has also been superimposed on factors such as the rapid rise in electronic consumption demand caused by the epidemic and the rapid rise of emerging industries such as new energy vehicles and photovoltaics. These factors were finally ignited by the US sanctions, causing a run of production capacity and causing order grabs. The aftermath of the impact of these factors on the semiconductor industry is still there, so the most mentioned word in the industry in the past two years is "chip shortage".
is the "ghost" of the economic environment. Maybe it will be late, but it will never be absent. After two good years, the semiconductor industry is now experiencing symptoms of weak demand. Regarding this change, Chen Junsheng, chairman of Acer Group, said worried: "Now Acer's suppliers feel the reversal of demand, but their equipment suppliers (chip factories) are still laughing and eating and drinking, but not feeling the change in demand. Now there are order cuts and inventory adjustments in the downstream of the technology industry. The impact on upstream semiconductor factories under the superposition of the compound inventory effect, the impact on upstream semiconductor factories is likely to be difficult to estimate."
From the source, the driving force for the development of domestic semiconductor equipment lies in the listing, additional issuance and large fund investments of many manufacturers in the domestic semiconductor equipment field. These continuous investments are used in the development of equipment products, the construction of verification platforms and industrial bases, and accelerate the development of enterprises.But now, the recession of the economic environment will inevitably affect the additional issuance and investment in the capital market, so the country cannot be absent at this time. Although the Chinese government has been supporting the domestic semiconductor industry before, it mostly uses subsidies or national direct investment, tax cuts, etc., which has certain effects, but there are also "reverse textbooks" that are mixed with national subsidies and investment, do not do practical things, and waste resources.
Under the new round of semiconductor changes (demand reversal), the country's support for the domestic semiconductor industry should change its thinking. It cannot just start from the investment side, but more importantly, it is to make a fuss from the boosting demand side. Some industry insiders joked: "What is the country doing for cars to go to the countryside , and home appliances to go to the countryside , and pull it up from the demand side, so that the industrial chain can survive and move around." Although this is a joke, the idea is correct and feasible.
Thankfully, the new infrastructure proposed in the national "14th Five-Year Plan" has clarified the development of 5G, big data, new energy vehicles and other fields. Among these industries, the new energy vehicle industry has a great effect on promoting the development of the semiconductor industry. It is expected that the new infrastructure of will gradually make efforts in the second half of 2022. At that time, driven by this wave of infrastructure, domestic semiconductor equipment manufacturers will usher in a new wave of opportunities. Although the future of
is bright, the road is still tortuous, and the gap in technical strength and capacity supply still exists, and special attention is needed. It is expected that in the future, domestic equipment manufacturers will open up the situation from mature processes, seize market share, increase production and R&D investment, keep a close eye on the development direction of advanced processes, and wait for an opportunity, an opportunity that can promote Moore's Law , and have a good show of "breaking through". This is not a dream. ASML surpassed Nikon in Japan.
So, will history be staged again, or will all this be just a childish imagination? We can wait and see!
