"Leasing employees is worse than unpaid leave. I'm afraid it's very sad this year."
not only cut orders but also lay off employees. The chip industry is really difficult this year.
Collective inventory reduction in the semiconductor industry has just eased, and the wave of layoffs has swept. The market conditions this year are like bungee jumping. The semiconductor industry not only experienced order cuts from bottom to top, but even layoffs.
Some people are at a loss for the stock, some are not going well in transferring jobs, and some are going to lose their jobs. It confirms the warning issued by , Huawei founder , Ren Zhengfei, in the first half of the year, that is, recognizes reality and "live".
The semiconductor industry is heading for its biggest recession since the Internet bubble in 2000. He once held the real money from investors and invested heavily in the semiconductor industry. Chip design doctor Noan "Manager Cai" even believes that the prosperity of the chip industry this year ranks last among all industries.
Everyone knows the cycle,
But how long the cycle is difficult to predict
The semiconductor cycle chart of each stage records a period of ups and downs in the chip industry.
Source: Network
There is a cycle diagram that reveals the "destiny" of semiconductors in the next year in the past year.
The semiconductor industry experienced a shortage of supply from the end of 2020 to the beginning of 2021, but the supply has been rising. Many institutions predicted last year that the chip shortage will end by the end of 2022.
Figure 1: An analyst of an institution drew
Figure 1 includes the forecast of in the four quarters of this year, , 21Q4-22Q4, the semiconductor market evolved from price increase to volume increase, and demand is expected to still rise, and supply still cannot meet demand by 22Q4. It presents a picture of thriving .
At that time, (January 2022) research institute believed that we are in the third stage of the continuous expansion of scissors gap, which comes from the superposition of triple innovations of 5G infrastructure + replacement, carbon neutrality and unmanned driving, and the demand is extremely elastic.
However, even the predictions of the same institution are only valid in "stage". When everyone thought that supply would continue to meet the thriving demand market, the "Black Swan" event happened.
Figure 2: The same analyst drew
Figure 2 includes the actual situation of in the past period of time , 21Q4-22Q2, the demand side began to appear in "black swan" for three consecutive quarters. Demand began to turn sharply since 21Q4, and the water level of semiconductor inventory gradually rose, and the market began to oversupply . By 22Q4, demand has dropped to freezing point.
Everyone knows the cycle, but how long the cycle is difficult to predict, so they can only be aware of it. It turns out that the hot market has burned to the end last year.
From downstream mobile phones, computers, TVs and other manufacturers to upstream panels and various consumer chip manufacturers, not to mention replenishing inventory, it is too late to destock. The spot market has greatly reduced prices, and chip design company Yilong paid high liquidated damages, generally using self-destruction to escape the vortex of high inventory.
According to the latest data from Future Horizons, the semiconductor industry is heading for the biggest recession since the Internet bubble in 2000 and one of the biggest recessions in chip manufacturing history. Cai Songsong, a top fund manager, believes that the prosperity of the chip industry is the worst among all industries in 2022.
is replaced by domestic products that are promising for a long time, because the current focus is still on consumer categories, and it will also be affected.
A friend in the chip distribution industry said that now the supply of large foreign manufacturers is stable and the prices are excellent, and domestic brands are emerging one after another, and customers are beginning to compare prices. The company has represented many domestic brands, and some mobile phone manufacturers have cut orders of more than 40%. This year, the number of consumer chip orders he is responsible for has dropped sharply.
This day came earlier than expected, and consumer chips were already "near dusk" in the global industry cycle. The semiconductor stock invested by this friend also suffered a tragic decline, and a lot of cash was trapped.
Inventory is high, order cuts, layoffs, and bankrupts
" International Electronic Commerce Information " The results of the 2022 third quarter electronic components procurement survey showed that 80.5% of the respondents encountered the experience of cut orders in consumer terminals in Q3 , more than 80%; the remaining 20% of the respondents did not encounter order cuts. Most of them served in areas with high prosperity such as automobiles, industry, and electricity, so they were not affected by the "cold" of the terminal.
In order to stop losses in time, the chip design industry will also cut orders if it loses money.
As the economy took a sharp turn for the second quarter of this year, the third quarter became more severe. The inventory level of IC design operators continued to rise. In order to avoid the inventory development to an uncontrollable situation, some operators have also reduced their investment in the second and third quarters, and paid the wafer fab fine for the failure to reach the current investment in the current period.
From cutting orders to layoffs, from downstream terminals to upstream wafer foundry, bad news in the industry chain has continued to come recently:
from downstream to upstream
Samsung : News says that Samsung Electronics may reduce mobile phone production by 30 million units this year, from the original planned 310 million units to 280 million units. This time the order cut covers all Samsung price mobile phones, including flagship phones.
Apple : According to Taiwanese media reports at the end of October, due to the overall market being deserted, Apple has determined to cut orders for iPhone 14 Plus, with the order cut of about 40%, and other models will make up for the gap in total shipment volume. According to industry reports, Apple has even begun to cut orders on A15 and A16 chips, and even the iPhone 14 Pro, which Yitong praised in the new financial report, has also been lowered.
Qorvo: According to Digitimes, citing sources in the RF chip and component industry, RF chip manufacturer Qorvo has cut the wafer casting volume of UMC (UMC) amid increasing uncertainty on demand side, but this violates its LTA contract with UMC (long-term contract) .
MediaTek : According to the report of Fubon Investment Advisor, MediaTek has slightly lowered its annual smart phone chip shipment expectations to 570 million groups. Among them, the shipment volume of Dimensity 9000 chips in 2022 may be reduced from the original estimated 10 million sets to 5-6 million sets.
Qualcomm :Tianfeng Securities shows that Qualcomm lowered the flagship chip platform Snapdragon 8 Gen1 orders in the second half of the year by about 10-15%. The shipment estimates of SM8475 and SM8550 remain unchanged. It is expected that after SM8550 is shipped at the end of this year, the price of SM8450 and SM8475 will be reduced by 30-40% to facilitate inventory clearance.
Renesas and ON Semiconductor cuts automotive chip orders : Morgan Stanley pointed out in the latest report that it is known from the latest survey on the semiconductor wafer foundry rear-end process that some automotive semiconductor suppliers, including Renesas Semiconductor, ON Semiconductor , are currently cutting some chip test orders for the fourth quarter, indicating that automotive chips are no longer out of stock.
Yilong : IC design factory Yilong announced on November 3 that as the brand factory continues to downgrade the annual shipment volume, the inventory sales speed is not as expected. In order to accelerate inventory sales, it announced that it will terminate the three-year contract with the foundry, and it is expected to pay liquidated damages to the foundry in the fourth quarter.
Small and medium-sized chip design companies : Cailianshe, November 7, it is understood that many small and medium-sized IC design operators with a high proportion of PCs are continuing to reduce the amount of chips invested in wafer foundries or discuss delaying the pull-up. It is difficult to predict when the market conditions will recover.
From the terminal and chip design companies to the order-cutting wave is finally transmitted to wafer foundry.
Qunzhi Consulting Research Data shows that since Q2 2022, due to the order cuts of downstream customers, the capacity utilization rate of wafer foundry has begun to decline. Due to the relatively single product structure, 8-inch wafer fabs are more affected than 12-inch wafer fabs.
The world's advanced and Liji Electric's capacity utilization rate dropped to about 90% in Q3 2022, and it is expected that the same decline will still be achieved in the fourth quarter of 2022.
semiconductor industry is crowded with layoffs
"Silicon Valley " has become synonymous with the gathering of high-tech companies such as semiconductors. The real Silicon Valley in the United States is currently facing a cold wave of layoffs. According to statistics on the layoffs statistics website, the number of layoffs in the US technology industry exceeded 100,000 this year. Among them, the presidents in May and June were 27,000, which was 200% of the same period last year. The announcement of layoffs in October increased significantly by 48% year-on-year. In addition, high-tech enterprises in Hsinchu Science Park, known as Taiwan's "Silicon Valley", have also begun to give employees "unpaid leave".
"Leasing employees is worse than unpaid leave. I'm afraid it's very sad this year." said an employee of the panel driver chip company, which has been severely affected by .
display driver chip factory : Taiwan media reported on November 7 that after the senior executives of Qunchuang cut their wages from October, the operations of upstream key component driver IC operators have become more steep. Some indicator factories have recently followed up on senior managers' salary cuts and plan to start layoffs before the Lunar New Year. This is the first industry facing a storm of layoffs under this wave of economic reversal in the electronics industry.
storage related : At the beginning of this year, Micron dissolved Shanghai's DRAM design department and laid off relevant chip designers; Seagate , the world's largest computer hard drive manufacturer, said that on October 24, the company's board of directors had approved the implementation of a restructuring plan to reduce cost expenditure, which included layoffs of about 3,000 employees - accounting for about 8% of the total global employees.
Intel : According to Bloomberg on October 12, people familiar with the matter revealed that chip maker Intel may announce layoffs of thousands of employees around the announcement of its third-quarter financial report, of which the company's sales and marketing departments have been the biggest impact. As of July this year, Intel has 113,700 employees. Intel's sales and marketing departments may lay off about 20% of their employees, people familiar with the matter said.
Marvell: On October 26, news in the industry was reported that Meiman Electronics (Marvell) will abolish most of China's R&D teams and only some of the design service personnel in Nanjing will be retained.
Grid: November 15th news, the world's semiconductor wafer foundry and the largest chip foundry in the United States, Grid (Global Foundries) responded to the rumors of "freeze recruitment and layoffs" that it is launching a recruitment freeze and taking a series of targeted actions to selectively reduce the number of employees.
ARM: After the chip IP giant ARM failed to "sell itself", it had to increase revenue and reduce its 3,500 employees of its British company to 2,800. According to reports, ARM decided to lay off 18% of its employees worldwide, but the layoffs seem to fall more on UK employees than in other countries. There are 550 layoffs in other parts of the world, while 700 employees in the UK have been laid off.
HP : PC giant HP announced that it will lay off up to 6,000 employees in the next three years as a decline in demand for personal computers erodes the company's profits. Most of HP's revenue comes from computer sales, and HP CEO Enrique Lores said the market downturn started with low-end consumer goods, but this phenomenon has spread as companies lay off employees and restricted investment in technology. To manage costs, HP will cut up up to 10% of its global 61,000 employees in the next three years and reduce its layout in the real estate market.
What is worse than layoffs is bankruptcy. Due to the huge impact of slowing market terminal demand, the shaky Taiwan LED chip factory New Century Optoelectronics Co., Ltd. recently declared bankruptcy and closed down from November 16, 2022.
When will it warm up?
Although the global automotive semiconductor market size exceeded consumer electronics for the first time last year (12.4% vs 12.3%) , , but the rapid growth of automobiles and other industries is not enough to hedge the decline of the entire market , so we still cannot give up because of the choking. The turning point of consumer electronics data turning positive is worth paying attention. In terms of display panels, the overall (capacity utilization rate) html rebounded to about 65% in 210, and the average metering rate of Chinese LCD panel factories also rose to 70.6%, and the price of multiple sizes stabilized or rose, and the bottom of the panel industry seems to be gradually showing signs.
For smartphones, the market research agency IDC said that the worst period for smartphones has passed and the market is expected to return to normal in the second half of next year.
IDC release report points out that compared with PCs and servers, we are more optimistic about the performance of smartphones next year. Although Android-based mobile phone brands and supply chains are still cautious and wait-and-see, as the supply chain has slowed down for 1.5 years and inventory has been corrected for three quarters, coupled with factors such as the normalization of China's mobile phone inventory, ease of semiconductor shortages, and new phones have driven the improvement of mobile phone specifications, the smartphone industry is expected to bottom out in Q3-Q4 this year.
Although the global economic decline this year has caused a brief decline in semiconductors, Huawei's chief supply officer believes that semiconductors have changed from sunset industry to sunrise industry, and from a longer cycle, wave innovation will continue to promote the development of the entire market.
Wait, the next spring is coming.
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