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The chip chopping extends to autos, industrials and semiconductor giants such as Micron

Update time : 2022-08-20 12:57:37

Manufacturers in many industries around the world have been building up their stocks of chips so they can secure supplies in the event of another supply crunch. However, as the market fears an economic slowdown or even recession, the manufacturers have also performed a U-turn. Historically, the semiconductor industry has experienced frequent cyclical demand fluctuations, but this time, the changes are complex. Many researchers are now scratching their heads about what the current weakness in semiconductors will look like.

Recently, the market spread that Texas Instruments a general consumer power management chip (model TPS61021) last year from the unit price of 1.2 yuan to 45 yuan (36.5 times higher than normal), now down to about 3 yuan (1.5 times higher than normal), up and down like a roller coaster. It was also reported that Texas Instruments urgently adjusted its market strategy and notified many customers of the reduction in the shipping price of analog chips, which dropped from 100 yuan to 20 yuan per chip. The latest forecast from Micron, another memory-chip giant, confirms the broader picture. On June 30, meguiar's, said by personal computers, smart phones and other consumer electronics end demand under the influence of weakening short-term demand forecast industry will be close to the third quarter of the 2022 fiscal year showed a sharp decline, meguiar's also plans to reduce the growth of 2023 supply level, and the inventory to a part of the market demand in the next year. Hua Jie, founder and CEO of the new chip distribution platform "Chip Superman", told the paper that the demand for consumer chips in general categories has cooled, and prices have a tendency to return to normal. "Falling market demand, sharp decline in terminal shipments, upstream MCU, driver IC, memory chip, 5G chip, CIS (contact image sensor), GPU, CPU, passive components... Demand has been affected one after another, price cuts, destocking, the industrial chain has fallen into a 'domino' chain reaction.
The direct cause of the current weakness is reported to be a large increase in inventories in the semiconductor supply chain since the beginning of this year. In February, for example, semiconductor manufacturers' inventories of chips supported 1.2 months of downstream production consumption. In June, global inventories increased to 1.4 months of consumption, and in July to 1.7 months. More fundamentally, consumers are tightening their wallets, and global PC and smartphone sales are collapsing.
The clearest sign of demand weakness came in July, despite early warnings that the market was stabilizing. That was when Intel, the US semiconductor giant, shocked Wall Street analysts with the news that its second-quarter revenue was $2.6 billion, 15% less than analysts had expected. The poor results were due to a "once in a decade" inventory correction in the semiconductor industry, as well as Intel's own operational problems. In terms of capacity expansion, many semiconductor companies in the United States used to plan to expand production facilities at home, but the market downturn has forced them to rethink expansion plans. Intel said it would reduce capital spending by $4 billion for the rest of the year; Micron has vowed to invest $40 billion in the U.S. by 2030. But the company then corrected itself, saying it would slash capital spending next year because of weak markets.
Overall, the rapid weakness this time has prompted several U.S. semiconductor giants to trim billions of dollars in capital spending plans. Crucially, the latest news on Sina technology today shows signs that the range of semiconductor weakness is widening. Micron Technology, an industrial company and auto maker, is the latest to cut orders for chips. However, it is impossible to tell whether these customers are adjusting because of the high volume of previous purchases or are being forced to cut back on orders due to declining demand from their own downstream customers.
Clearly, in the past two years, the semiconductor industry has seen heavy inventories, followed by a shortage of supply, and many analysts have been afraid to examine with the same confidence as in the past how the slowdown will affect the semiconductor industry. Some analysts' hopes that the semiconductor decline would be concentrated in PCS and smartphones have been crushed by reality. Either way, these are clear signs of weak demand. For now, though, most semiconductor experts predict that the weakness this time will be modest, because overall the global economy is heading for a soft landing. However, the dramatic changes in some market elements have prompted the industry to think about complex elements that interact with each other.

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