| Produced by Yu Bin
| Chaoqi.com's "Yujian Column"
After experiencing eight consecutive quarters of positive growth, the global semiconductor market has experienced two consecutive quarters of negative growth since the second quarter of this year. As a bellwether for the semiconductor industry, the storage industry continues to be under pressure in the third quarter of this year. Although the data for the fourth quarter has not yet been released, judging from all aspects of the situation, its sales situation is not optimistic. It is obvious that the global semiconductor market is entering a sustained and in-depth adjustment cycle.
Inventory clearing has become the main theme of the semiconductor industry this year.
Omdia data shows that the global semiconductor market revenue dropped to US$158 billion in the second quarter of this year, and revenue in the third quarter dropped by 7% to US$147 billion. The main reason why the semiconductor market has continued to decline in sales is due to the structural oversupply of products.
On the one hand, the supply of personal consumer electronics products exceeds demand. On the other hand, the demand for semiconductor products in emerging industries such as self-driving cars, artificial intelligence, the Internet of Things, and intelligent terminal equipment is gradually increasing. However, it will take time for the positive effects in this regard to be fully realized.
The same is true for the domestic semiconductor market. Since the first half of this year, the domestic market's consumer demand for personal computers, smartphones, tablets and other electronic products has shown a steady decline. Canalys data shows that in the second and third quarters of this year, domestic shipments of personal computers (including desktops, laptops and workstations) fell by 16% and 13% respectively year-on-year. The demand for data service centers has remained relatively stable.
Generally speaking, oversupply is the main factor leading to a sharp decline in semiconductor product shipments. In the third quarter of this year, global memory chip revenue alone fell by 27%. In addition, companies have previously accumulated a large amount of chip inventory in response to insufficient production capacity and . It will take a long time to digest these remaining production capacities, which will naturally further weaken the market's overall expectations for chip demand. Looking specifically at products, the shipments and prices of dynamic memory (DRAM) and flash memory (NAND) have dropped significantly. Omdia data shows that global sales of DRAM6 in the third quarter of this year were US$17.548 billion, a decrease of 29.8% from the previous quarter. Among semiconductor companies, Samsung and Hynix , whose main products are memory chips, have also been the most affected. The
financial report shows that in the third quarter of this year, the operating profit of Samsung Electronics’ Semiconductor Division was 5.12 trillion won. dropped as much as 48.7% from 9.98 trillion won in the first quarter of . Intel 's semiconductor business contributed US$14.851 billion in revenue to the company in the third quarter, which was almost the same as the revenue in the second quarter. This shows that Intel has been relatively less affected in this regard, and the company has temporarily overtaken Samsung in the semiconductor business field.
The low-level semiconductor market has both opportunities and challenges
Past experience also shows that as the supply and demand relationship changes, the price of commodities will naturally show a cyclical rise and fall trend, and the difference is only the duration. From the 1970s to the present, the global semiconductor industry has experienced seven price fluctuations.
The current downturn in the semiconductor market will continue for a long time, and it is expected that this situation will be alleviated by the end of next year. The World Semiconductor Trade Statistics Society (WSTS) predicts that the global semiconductor market size will decrease by 4.1% next year, the output value of and will drop to US$557 billion, and the memory chip market will decline by 17%.
Gartner's forecast is relatively optimistic. It believes that the semiconductor market next year will decline by about 2.5%, and the decline in the memory chip market may exceed 10%. As a leader in the global semiconductor manufacturing industry, TSMC's budget has always attracted the attention of industry insiders.
Not long ago, TSMC announced that it would reduce the company's annual capital expenditure from US$40 billion to US$36 billion. This also reflects from one aspect that the current weakness of the global semiconductor market will continue for a long time.
In recent years, domestic companies have also made many breakthroughs in the semiconductor field. Semiconductor self-sufficiency is getting stronger and stronger. Although there is still a big gap in high-precision semiconductor production processes below 14 nanometers, in recent years, local brands have developed rapidly in fields such as automotive semiconductor manufacturing and artificial intelligence (AI) semiconductor design and manufacturing.
In the memory field, such as NOR Flash, EEPROM and other small-capacity flash memory projects, domestic companies have already had the ability to replace imports, and they also have a certain influence in the world. Currently, GigaDevice Innovation has about 20% of the NOR Flash market share, ranking among the top three in the world. Juchen's sales in the EEPROM field rank third in the world and first in the country.
Due to the low technical barriers and low gross profits of small-capacity flash memory projects such as NOR Flash and EEPROM, foreign semiconductor companies are gradually withdrawing from these niche fields. Domestic companies can seize this opportunity and start with the easy and then the difficult. Do the flash memory first to form a differentiated competitive advantage, and then expand into other sectors after becoming bigger and stronger.
In comparison, weak market demand has a greater impact on the domestic DRAM industry's strategy of increasing capacity and capacity. Currently, Hefei Changxin, the largest local DRAM manufacturer, had a market share of 3% as of last year. According to the company's plan, after expansion, the production capacity will eventually reach 360,000 chips per month.
A report released by Eugene Investment Securities shows that the global DRAM market sales in the third quarter were US$17.973 billion, a sharp decrease of 29.3% from the previous quarter. Therefore, in the process of increasing production capacity, Hefei Changxin also needs to control the speed and rhythm of progress to avoid the fluctuation of in the market supply and demand from affecting the company's long-term development.
Emerging industries will become a key driver of the memory market
Although the sluggish personal consumer electronics market has had a greater negative impact on the semiconductor industry, this does not mean that the latter can only be in a long-term slump. In recent years, emerging industries such as autonomous vehicles, data centers, industrial automation , artificial intelligence, Internet of Things, Metaverse, and wearable devices will also have greater demand for semiconductor parts in the future.
It can be said that computing power has become a necessity in the era of information technology. Digital and intelligent societies are inseparable from the support of computing power. For example, the first general-purpose GPU chip BR100 released by Biren Technology has a 16-bit floating point computing power of more than 1000T and an 8-bit fixed-point computing power of more than 2000T. The peak computing power of a single chip reaches the PFLOPS level, which is more than three times that of flagship products on sale abroad. Such products will definitely have broad application prospects in the future.
Therefore, companies can flexibly adjust their business strategies and priorities based on market demand. Even if the industry has entered a weak cycle, domestic semiconductor manufacturers still have great potential. Now in the middle of this year, Yangtze Storage has launched the enterprise-class PE310 solid-state drive series based on PCIe 4.0, which can support application scenarios such as cloud computing, big data, and streaming media.
The automotive market will be an important force in pushing the semiconductor industry out of the trough. When the car becomes more intelligent, the more chips are needed to build a car. Gartner predicts that from 2022 to 2025, the value of the semiconductor components contained in each car will increase from US$712 to US$931.
At present, the domestic automobile industry is still facing a shortage of chips. With the steady growth of automobile production and the continuous improvement of the penetration rate of new energy vehicles and , and more and more cars are equipped with L2-level advanced driving assistance systems, in the future, self-driving cars above the L3 level are no longer far away from market application. All this leaves the semiconductor industry with time and space for adjustment and transformation.
Moreover, the amount of data generated when smart cars are running is larger, which puts forward higher requirements for the capacity and processing speed of automotive memory chips. Data from the China Automobile News shows that the average storage capacity of mobile phones last year was 105GB, and that of cars was 34GB. By 2026, the storage capacity of cars will reach more than 483GB, and the storage capacity of mobile phones will only increase to about 350GB. Obviously, the storage capacity requirements of future cars have far exceeded that of mobile phones.Currently, the automotive storage market is dominated by foreign companies such as Hynix, Samsung, Micron, etc. Strong domestic companies include Dongxin, GigaDevice, Beijing Junzheng, etc. Among them, GigaDevice's GD5F series (capacity 1Gb-4Gb) successfully passed the AECQ100 automotive grade certification this year. So far, the company has achieved a comprehensive layout in the field of automotive grade products.
Beijing Junzheng acquired ISSI, which is quite powerful in the automotive and industrial storage fields. The latter's product revenue in the DRAM and NOR Flash business sectors ranks among the top in the world.
Capital is obviously also optimistic about the development prospects of this field. At the end of November, only 5 months after the last round of strategic financing of 4.5 billion yuan, Yuexin Semiconductor announced the completion of a new round (B round) of financing . The company plans to use all the funds raised to build the semiconductor phase 3 project. Yuexin Semiconductor started from consumer-level chip manufacturing, and in the past few years has expanded the company's business to the manufacturing of industrial-grade and automotive-grade chips.
Sohu Automotive Research Laboratory predicts that from 2019 to 2025, the average annual compound growth rate of the global automotive memory chip market will reach 14.94%, among which high-performance automotive chips such as LPDDR and NAND Flash are the most popular among automotive companies.
predicts that from 2018 to 2025, the average annual compound growth rate of LPDDR and NAND Flash will reach 16% and 21% respectively. It can be seen that the demand for chips in the automotive industry will further increase in the future, and local semiconductor manufacturers are also vigorously deploying the automotive chip market, which is undergoing rapid growth.
Conclusion
The current semiconductor market is generally still in the adjustment stage, and this process may last for a long time. On the one hand, the personal consumer market continues to be sluggish, and will Stock has become the main theme of the current market. On the other hand, emerging industries have also brought many positive factors to the semiconductor industry. For example, the automotive semiconductor market has shown high growth characteristics and attracted the attention of various companies. However, before the overall situation is completely changed, the semiconductor market still needs to go through a relatively difficult period of adjustment and adaptation.
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