Utmel: The Trend Analysis of IC Chips for the Second Half of 2022

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Aug 30, 2022, 10:39 ET

SHENZHEN, China, Aug. 30, 2022 /PRNewswire/ -- Utmel has completed research into the trends and analysis of IC chips for the second half of 2022.

The "chip shortage" tide will come to an end, cherish the day of dividend.

Prediction of "chip shortage" problems will be fully solved in 2023. In the first half of 2022, various kinds of chip price news has been coming from the market and the institutions have been warned that "chip shortage" has appeared a big reversal.

Utmel, a professional electronics distributor of electronic components, provides data to users with the chip categories with falling prices in the first half of 2022 and their subsequent needs and price trends.

Driver IC

Prices are Reduced by 20% in the Third Quarter

Driver IC became a prime target for panel makers to bargain due to its high pricing and huge profits last year.

Driver IC prices has been steadily reduced since the beginning of the year, with a 10% to 15% drop in the second quarter.

The decrease in driver IC pricing is expected to reach more than 20% in the third quarter, according to Xie Qinyi, director of display research at Omdia, since wafer capacity has become less scarce and panel plants have reduced production, causing demand to plummet.

Driver IC was compelled to lower costs across the board as the current wave of panel demand weakened.

South Korea and the mainland drive IC factory, according to Xie Qinyi, can only follow up price reduction, but Taiwan's drive IC factory, which includes Novatek, Himax, FocalTech, Fitipower, Sitronix and Raydium, continues to lead the global drive IC market despite pressure in the panel factory.

Weighed on Prices of Passive Components

Prices of Consumer MLCC Should Fall to 30% in the Second Half of 2022

The price of raw materials for passive components soared as a result of the Russia-Ukraine war. However, the downstream inventory clearance sales were not as good as expected due to the impact of China's epidemic control on industrial demand, particularly for standard items, which were most affected. It was difficult to respond to costs under the depressed demand.

The industry was expected to have clearance sales and return to normal levels at the end of the second quarter for standard MLCC and resistor stocks in distributors and manufacturers. However, due to the outbreak containment in China and supply chain shutdown, inventory destocking took longer than expected and may not come to an end until the middle of the third quarter.

In the case of MLCCS, TrendForce's recent study reveals that consumer-regulated MLCC costs fell by an average of 5 to 10% from the first quarter of 2021 to the first quarter of 2022.

In the second quarter of this year, the price was reduced by 3 to 5% to encourage consumers to boost their desire to pull goods, and certain low order consumer regulation MLCC prices even reached the cost of materials. Based on the preceding MLCC supply and demand cycle, the supply and demand turning point frequently happens after a continuous increase in price and quantity or a decrease in price and quantity.

For example, the turning point of supply and quantity generally happens after a simultaneous increase in price and quantity from the second half of 2020 to 2021, when volume and price have been dropping concurrently for two consecutive quarters.

The report indicates that MLCC quote pressure will not abate in the second half of 2022, and the price is expected to decrease further, with an average reduction of 3-6%.

Vice versa, due to the client chip scarcity, industrial regulation niche MLCC price is assisted in reviving the cargo momentum and stabilizing the drop of 1% to 2%. However, the yearly quote rates for MLCC stay stable.

Analog IC

Price Surge will Come to an End

Analog IC giant TI informed a number of its client manufacturers that the PMIC-led analog IC pricing wave may terminate or potentially face downward pressure as a result of the third quarter chip capacity relief.

The analog IC market was hot last year, with a long-awaited 17-year price increase, particularly among general-purpose analog ICs, and the biggest share of power management chips in significantly short supply, making it the hottest category of the semiconductor industry.

However, with the rapid opening of new production capacity and the suspension of downstream demand, the analog IC price wave will end this year, and even the previous industry's most live power management chip is unable to continue the prosperity, indicating that the overall market situation is deteriorating sharply. Market reports claim that several recent analog chip suppliers have changed their attitude and are now willing to bargain on pricing.

News that Some TI chip prices in the last two months fell by up to 80%. The media has confirmed that some of TI's power management ICs are indeed experiencing price fluctuations in the spot market.

For example, Model TPS61021 general-purpose consumer power management, which price has fallen from a high of $ 45 last year to about $ 3 at present. For example, the price of the Model TPS61021 general-purpose consumer power management has fallen from a high of $ 45 last year to about $ 3 at present.

"The chip has past its peak time of scarcity, and the analog IC market's turning moment may arrive sooner than projected." According to the Utmel, the past issue of hard-to-find items will not reoccur, and the initial supply of chips has grown greatly. However, the number of inquiries from clients has decreased.

Destocking Urgently

MCU Distributors Compete for Customers by Price War

The industry reported in April that IC distributors were lowering the price of consumer MCUs to reduce excess inventory. It is worth noting that the decrease in consumer MCU prices was initiated by IC distributors rather than chip manufacturers.

IC dealers stocked up on consumer MCUS that may last three to four months when prices were higher. Due to the uncertainty in the demand outlook this year, they have recently taken action and started to reduce the prices of consumer MCUs. For example，in response to rivals' aggressive pricing strategies, MCU supplier Holtek instructed its distribution partners to make appropriate price adjustments.

GPU：The Price Falls Steadily

With the price of virtual currencies fluctuating, and the cryptocurrency Ether projected to change its operating mode after this summer, reducing demand for the GPUs needed to mine cryptocurrencies today, graphics card prices have loosened as well.

GPU prices trended downward as early as March of this year. PC GPU prices are still falling as of May.

Financial institution Baird downgraded GPU maker Nvidia to "neutral" following the recent drop in GPU prices.

Since 2022, Nvidia shares have fallen 31%, compared to about 37% for AMD shares, the GPU manufacturing leader.

The average selling price of GPUs has decreased, according to Susquehanna analyst Christopher Rowland, from around 77 percent over the manufacturer's suggested retail price to approximately 41 percent above.

Peak Season Shortage Expectations Fall Short

NAND Flash Price Reversal Possible

Witten and KIOXIA Japanese joint venture factory contamination in February, driving NAND Flash prices up. The market originally expected that with the sequence into the peak season, the industry may be short of goods in the third quarter. However, affected by the epidemic sealing the city, inflation, and other factors, the market has grown tense since May, and the pulling force has slowed. It is widely anticipated that third-quarter NAND Flash market circumstances would put downward pressure on prices.

After the news of pollution, Witten immediately sent a letter to customers to increase prices, Micron also indicated in the mid-February NAND spot, the contract price doubled up, the contract price rose 17-18%, and the spot price rose more than 25%. With the shortage roughly established, the second quarter price increases are expected to be stronger than previously expected.

However, since the second quarter, China has started sealing control due to the spread of the epidemic, coupled with inflation pushing up, the overall environment uncertainty has increased, and the industry's outlook for the second half of NAND Flash also turned conservative.

8299-TW believes that NAND Flash may face pressure in the third quarter, but is optimistic that the Christmas business opportunity will exist in the second half of the year after the uncertainties are removed.

The memory module industry also pointed out that downstream customers have continued to de-stocking since the first quarter of this year, and current customers still have a certain inventory level. Although the second half of the year coincides with the traditional peak season, there are many variables in the market, and the customers' attitude has become cautious and conservative since May. The NAND Flash price is estimated to turn down in the third quarter.

According to TrendForce, retail demand for NAND Flash wafer was weak in March, owing to a more conservative shipment outlook for other terminal products. As a result, suppliers are more willing to cut prices, and prices may begin to fall in May. In the second half of the year, NAND Flash gradually oversupplied, and NAND Flash wafer prices are expected to fall 5-10% in the third quarter.

SIMO-US is relatively optimistic about this, believing that the original manufacturers have recently been quite restrained in output, as a result of previous pollution accidents at the KIOXIA and Witten Japan plants, as well as other events that impacted supply. At the same time, data center demand is high, NAND Flash is not cheap, and market conditions are expected to improve in the second half of the year.

NOR Flash Market Conditions

Lower Densities Depreciation

NOR Flash prices diverged this quarter after rising for six consecutive quarters due to China lockdowns and environmental uncertainties. Unlike low capacity price declines, high capacity NOR Flash in the car, 5G, and other market demand, its price has remained stable, Taiwan factory Macronix, Winbone electricity operation has supported.

NOR Flash prices have been rising since the second half of 2020, as a result of increased demand, a shortage of foundry capacity, and crowding out new NOR capacity. Its price has increased for six consecutive quarters so far this year, the longest increase in history, due to a change in supply and demand structure.

Low capacity NOR, however, was affected by the impact of China lockdowns on consumer electronics demand and the uncertain environment, which led to an increase in client inventory levels, resulting in a price reduction of about 3% in the second quarter.

Demand for high-capacity 256M, 512M, 1Gb, and 2Gb NOR Flash continues to rise in Shanghai, and prices are relatively stable, driven by industrial applications such as servers, automotive, and 5G base stations.

Macronix continues to focus on high-capacity products, with revenue accounting for more than 50% of revenue in the first quarter of this year, reaching 52%. More than 80% of the company's NOR Flash products are in non-PC or consumer electronics applications. Benefiting from the continued strong demand for high-capacity/high-quality NOR Flash, the ASP of NOR Flash products remained stable in the first quarter and is expected to remain flat or increase in the second quarter.

In the past, Winbone electricity has mostly focused on low and medium capacity NOR Flash layouts. However, as the demand for high-capacity products continues to flourish, the proportion of high-capacity products has gradually increased over the past year. The gross margin will continue to improve as the product portfolio is adjusted.

High-capacity NOR Flash is still structurally in short supply this year, and the performance of its high-capacity products is increasing quickly.

DRAM：More Obvious in Late 2022

DRAM spot prices have been declining since April and will continue to trend lower in May and June, which will further drag down memory contract prices in the second quarter.

Spot prices for mainstream 8Gb DDR4 chips are said to have dropped 6-10% over the past month, while March saw a smaller, mid-single-digit drop. DDR3 prices have also fallen about 7% since April.

While DRAM chip makers are reining in their output growth, PC OEMs intend to take a wait-and-see approach amid increasing uncertainty on the demand side. In addition, PC OEMs are likely to regain bargaining power in late May to negotiate lower prices as demand uncertainty and COVID-19-related supply chain disruptions persist in China.

The declining performance of DRAM suppliers reflects the trend of a lower memory market and price. Nanya Technology (2408), for example, reported a 6% monthly revenue decline in May and a 3% quarterly revenue decline since the second quarter. Foreign investors assume Nanya's gross margin and operating profit margin to fall quarterly in the second quarter due to rising price pressure.

Credit Suisse Securities pointed out that with the overall economic uncertainty and the impact of the new pneumonia pandemic in 2021, electronic products such as TVs, set-top boxes, home applications, IoT wearable devices, and other demands are still low. As CXMT yield has improved and Winbone electricity's new plant wafer outcome increases before the end of the year, it will put supply in an upward trend and is expected to memory prices down to the second half of the year more obvious.

Utmel, as a result of ICS of investigation, pointed out that, instead of fighting alone, the efficient and orderly development of domestic industry should rely more on the coordination of the industrial chain. The more limited the resources, the more attention should be paid to the structural construction of the industry, following the industry's development trend and law.

SOURCE Utmel