episodes of micronet report (text/Lin Meibing) During the just-passed Double Eleven, smartphone sales were bleak, and even Apple could not stop the market decline, making brand manufacturers generally have a conservative or even pessimistic attitude towards the smartphone market next year.
At present, Samsung has significantly reduced its smartphone shipment expectations next year, and other manufacturers may follow up. This will put mobile chip manufacturers, which were originally high inventories, face greater operating pressure.
In order to digest inventory as soon as possible and reduce operational risks, mobile chip manufacturers have begun layoffs, salary cuts, production cuts, order cuts, price cuts, accelerates upgrades, and explores new markets... Since the fourth quarter, the chip inventory reduction campaign has begun.
Samsung took the lead in reducing sales expectations
According to media reports in Taiwan, Samsung Electronics was originally expected to ship about 290 million smartphones next year, a year-on-year decrease of 13%. Among them, the production of S series flagship models remains the same as this year, and the downgraded models are mainly mid- and low-end models of the A series and M series.
In fact, this year, affected by inflation , repeated epidemics, Russian-Ukrainian wars, geopolitics and other factors, the global consumer electronics market has been sluggish, affecting Samsung Electronics’ smartphone business. Samsung suspended the purchase of parts and continued to lower its smartphone shipment expectations in June this year, from the initial 334 million units to 300 million units in the middle of this year, and then to 260 million units in August.
At present, the global consumer electronics market has not yet recovered, Samsung Electronics' sales are not as good as expected, and inventory is rising. According to Korean media reports, Samsung Electronics' inventory assets increased in the third quarter, with inventory exceeding 57 trillion won, and increased by 51.6% year-on-year.
Faced with high inventory pressure and a weak market, Samsung recently lowered its shipment expectations for next year. Recently, Samsung Electronics said at a business briefing with its major partners that Samsung's smartphone shipments target will be close to 270 million units next year. Although it has increased slightly from the adjusted 260 million units this year, it has decreased by 20 million units compared with the previous expected 290 million units and 30 million units compared with this year's shipment target.
industry insiders pointed out that as the global smartphone market becomes saturated and the mid- and low-end markets continue to shrink, which has a certain impact on the overall smartphone market. Samsung Electronics’ smartphone sales will be difficult to hit another 300 million units. In addition, analysts’ expectations for the global economy and inventory pressure next year, so Samsung lowers its smartphone sales expectations for next year.
mobile phone industry insiders pointed out that generally expected sales are relatively high, which is a certain gap with the actual sales. Next year, Samsung Electronics may need to adjust its expected sales according to market conditions, and may further lower its expected target, even 270 million units cannot be achieved.
Honor, Huawei or variable
So far, Samsung is the first brand manufacturer to lower its smartphone shipment target next year, and other manufacturers' shipment expectations have not been announced yet.
Given that Samsung is the world's largest smartphone manufacturer, Samsung's reduction of expectations for next year is of certain indicator significance. Industry insiders said that the decline in global smartphone sales will continue until 2023. After Samsung lowers its smartphone sales expectations for next year, other mobile phone brands may also follow the downward revision of smartphone shipment expectations for next year.
However, the Isaiah survey initially predicts that the shipment targets of OPPO, vivo, Xiaomi , Honor and Huawei smartphones next year are basically the same as this year. However, Honor's overseas expansion and Huawei chip progress are variables that affect expectations next year.
In fact, different mobile phone brands are in different situations, and the shipment target settings may also be adjusted next year. Mobile phone industry insiders predict that the smartphone market will remain the same as this year in 2023, Xiaomi's smartphone shipment target next year will remain the same as this year's sales. OPPO, vivo and Transsion may slightly lower their smartphone shipment target next year, but Apple, realme, Honor, Huawei and Apple will instead raise their smartphone shipment expectations next year.
, especially Huawei and Honor. After Honor's independence, sales continue to increase. If it expands overseas next year, it may bring some additional sales, which will drive the growth of Honor's overall sales; similarly, Huawei's sales continue to shrink due to the chip ban, but judging from the market actions in the second half of this year, chip supply problems may be partially alleviated next year, and Huawei will significantly increase the expectations for smartphone shipments next year.
Overall, the industry is generally not optimistic about the smartphone market next year. According to the sales of semiconductor components, the demand for smartphones in 2023 will be the same as this year. President Murata Nakajima Kazuki also warned that smartphone demand in Greater China should not show signs of recovery this year, and even mobile phone sales will continue this year's decline next year.
industry insiders pointed out that in the face of continued sluggish market expectations, brand manufacturers' expectations for the smartphone market next year will become more conservative, and may generally fall by 20%-30% compared with the shipment target set at the end of last year.
chip manufacturers have increased significantly in operating pressure
Affected by the repeated epidemic, the Russian-Ukrainian war, inflation and the poor global economic environment, demand for smartphones and other products has continued to decline this year, and supply chain manufacturers have a large amount of inventory. At present, semiconductor manufacturers such as Qualcomm , MediaTek , Juze, Tongxindian, Lianyong, Duntai are facing huge inventory reduction pressure.
in its third-quarter results release, Qualcomm explained: "Short-term financial forecasts are affected by the two challenges of sluggish demand and increased customer inventory.
Jue said that demand for consumer electronic terminal products such as laptops and smart phones has slowed down, and it is expected that the adjustment of standard inventory will take about six months to digest.
Lianyong's net inventory in the third quarter fell to around NT$17 billion, with the inventory days of about 111 days. It takes two or three quarters to adjust these inventory.
Duntai recognized inventory depreciation and stagnant losses in the third quarter, with a total of NT$2.497 billion, and a loss in operation in the third quarter. Duntai added that most of the products that have been listed for inventory depreciation are TDDI, most of which are mobile phone and tablet applications. It is currently estimated that inventory will take 1 year to digest. If it is included in the inventory cancellation this time, the inventory amount will still be NT$7.064 billion.
MediaTek's revenue fell sharply due to the slowdown in 4G chip shipments and sluggish consumer demand in October, falling below the NT$50 billion and NT$40 billion, falling to a new low in 1 and a half years.
E-commerce club cadres pointed out that smartphones and other products cannot be sold, resulting in an increase in DRAM inventory. Memory manufacturers who want to reduce inventory have lowered their quotations. As demand for smartphones and PCs may continue to weaken, DRAM prices may continue to fall in the future.
semiconductor industry has entered a period of inventory adjustment. In order to sell inventory, IC design factories have reduced the wafer input, and the wafer foundry production capacity has loosened. Undel said that currently customers focus on destocking as their operating focus, and reducing quotations should have limited benefits to improving the capacity utilization rate of . The operation of the later-stage packaging and testing plant of
cannot avoid being affected by inventory. Tongxindian said that the current mobile phone market client inventory continues to rise, and mobile phone sensor suppliers may need to sell inventory for more than two to three quarters, and it is estimated that it will be after the end of the second quarter and after the third quarter next year.
Semiconductor parts sales are currently at a high level of 64 days, and will reach a peak in the second half of this year. Next year, with the adjustment of the supply chain, inventory will gradually fall back to normal for 45 to 50 days. The industry pointed out that the inventory days of semiconductor companies in Greater China in the third quarter were 95 days, which was higher than the same period in 2019 and 2021. High inventory of
chips has slowed down significantly this year's growth in the global semiconductor industry. According to the industry research structure, the global semiconductor output value will be approximately US$618.5 billion this year, a growth of only 4%.
At the same time, smartphone manufacturers are conservative about the market next year, which increases the pressure on mobile chip manufacturers to destock. Industry insiders pointed out that the first quarter of next year is the off-season, and the effect on digesting chip inventory is limited. If the smartphone market still does not recover in the second quarter of next year, the large inventory of chip design manufacturers may not be gradually alleviated until the second half of next year. These high-inventory manufacturers will face greater operating pressure.
inventory destocking battle started ahead of schedule
At present, the industry is generally pessimistic about the semiconductor market next year. IC Insights expects the global semiconductor market to fall 6% year-on-year in 2023, while Semiconductor Intelligence is expected to fall 14% year-on-year. This will be the biggest drop in the semiconductor market since fell 32% year-on-year from in 2001.
In order to survive the cold winter of the semiconductor market next year and digest inventory as soon as possible, chip design manufacturers are taking measures to increase revenue and reduce expenditure.
Some companies have begun to reduce their operating expenses by laying off employees and reducing salaries or cashing out salaries. A semiconductor testing factory in Taiwan has implemented reduced shifts since September 19, with a monthly break of 4 days and no salary is paid, and the monthly salary is not lower than the basic salary. It is expected to be implemented until November 30. Duntai expects to optimize 10-13% of non-R&D personnel, and executives will also cut their salaries simultaneously.
Some manufacturers have adopted the method of reducing production and cutting orders to deal with the cold wave of the semiconductor market in advance. memory chip is a barometer of the consumer electronics market. The recession in consumer electronics has caused the price of memory chips to continue to fall. Micron has recently reduced production of DRAM and NAND Flash by about 20%. Kioxia has reduced production by 30% since October, Wanghong has reduced production by 20%-25%, and Huabang Electric has reduced production by 30%-40%. According to the JPMorgan investigation, MediaTek, Qualcomm, AMD, Nvidia, etc. have also reduced the number of wafers invested at TSMC. Yilong and Jinghaoke even announced the termination of the long-term capacity guarantee contract with the wafer foundry in advance and paid a high liquidated damages.
price reduction promotion can alleviate the pressure on chip inventory. As the consumer electronics market continues to decline this year, driver chips, power management chips, , MCUs, etc. have begun to be cut and price cuts very early, and there is a normal promotion rhythm. Industry insiders revealed that although a mobile chip design manufacturer emphasized that it would not reduce prices due to short-term declines in demand, its power management chips have been promoting.
As the smartphone market continues to decline, mobile chip manufacturers are increasing their investment in non-smartphone chips and accelerating the cultivation of PC, VR/AR and other markets. MediaTek creates Kopanio 520/528 for Chromebooks, and Qualcomm's new Oryon processor for Windows PCs will also be unveiled in 2023. Qualcomm President and CEO An Meng predicts that 2024 will be a year for Windows PCs to shine with Snapdragon chips.
At the same time, VR/AR, known as the next generation computing platform, is also a market for mobile chip manufacturers to focus on research. After years of cultivation, Qualcomm recently launched the world's first Snapdragon AR2 Gen 1 platform specially designed for VR/AR, expanding its XR product portfolio. The platform adopts a multi-chip architecture, with a power consumption reduced by 50%, and an AI efficiency increased by 2.5 times, allowing manufacturers to create a more immersive AR glasses , accelerating the development of the AR market.
In short, in recent years, the smartphone market has been in a downward trend. Mobile chip manufacturers are under certain market pressure. Now they are affected by factors such as inflation, repeated epidemics, geopolitics, and war. The smartphone market is even more recession. Emerging application markets such as VR/AR have not yet formed a climate, and mobile chip manufacturers are in a difficult situation. If the consumer electronics market further declines next year, the inventory pressure on mobile chip manufacturers will further increase, and performance may also suffer from varying degrees of impact.
(Proofreading/Zhang Yiqun)
