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August core information summary: price increases continue, but the market appears

2021-09-08

In August, a number of important production areas in the IC industry proliferated, causing many original factories to stop production, causing downstream supplies to be tight. The foundry has launched a new round of price increases, which is also pushing up the market. At the same time, there were multiple "noises" in the market in August, which may indicate a reversal of the market. It is necessary to take them into consideration and adjust expectations for the future market.

August original factory price adjustment dynamics

Maxim: A 6% price increase across the board, effective August 22

Holtek: 10%-15% price increase from August

Nuvoton: 15% price increase for foundry services, effective September 1

Molex: 7% price increase across the board, effective October 1

Unisoc: The price of smart phone product lines (SoC, AI computing chips) will increase by 25%, effective August 1

Vishay: Resistance price increase by 10%-20%

Yageo: It is reported from the industry that starting from September 1st, the price of chip resistors from distributors in Greater China will be reduced by about 10%

The price increase of the original factory in August involved MCU, mobile phone chips, passive components and other categories, reflecting that market fundamentals are still in short supply. Yageo reduced the price of chip resistors, in contrast with other manufacturers, representing the emergence of market noise. Whether the fundamentals of subsequent price increases will be shaken remains to be seen.


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Looking back on August, upstream price increases and other factors still supported the lack of stock and price increases. Malaysia, the Philippines, and Japan have recently increased the number of new cases, affecting local IC and passive component shipments.

In August, the production lines of Renesas, Infineon and ST factories in Malaysia were forced to suspend work, affecting the production of downstream manufacturers. Representatively, for example, the ST Muar packaging and testing plant was shut down for a few days in August, causing the downstream Bosch's many types of auto parts to lose chip supply and face out of stock.

In late August, some of the production lines of Taiyo Yuden in Malaysia have also been suspended, and it is expected to resume on September 10. The shutdown of two major Japanese manufacturers mainly affects the MLCC market and may lead to an extension of the delivery period. In addition, the production line of the Japanese aluminum capacitor leader Jiamei in Malaysia has also been suspended for several days and is expected to resume on September 1.

In mid-August, American resistance leader Vishay announced an increase of 10%-20%. Vsihay's price increase just happened after the Philippines upgraded control, and subsequent production lines will be affected. If more production lines are suspended, it will inevitably lead to a large-scale extension of delivery and even price increases.

Wafer foundry continues to rise, directly driving the market

Another driving force behind the market is the price increase of foundries. In August, a number of foundries reported price increases. UMC reported that it will increase its offer by 10% in November. From January next year, TSM will increase prices by 10%-20% for processes above 16nm, and 10% for advanced processes below 7nm. SAMSUNG foundry also reported that customers have been notified to increase prices by 15%-20%.

Recently, wafer foundries have intensively increased prices due to upstream factors. In response to the increase in the price of raw materials such as metal silicon and methanol, silicon wafer giant Shin-Etsu raised the price of organic silicon products in March and August this year, and the cost pressure was passed on to downstream foundries. In addition, the shortfall in supply caused by the surge in demand is another major factor supporting the market. In particular, the long-term ineffective expansion of mature manufacturing processes has made the supply in short supply even more intense.

In addition to simple price increases, the industry also reported that foundries generally sign 2-3 year long-term contracts with customers. Judging from the production expansion progress of each plant, the new mature process production capacity is released on a large scale, exactly two or three years later. The foundry signs a long-term contract with the customer at this time to ensure that the price can still be locked after the market turns, and investment losses can be avoided.

"Noise" in the market may affect demand expectations

It can be seen from the long-term contract concluded by the foundry that the risk of market reversal has been taken into consideration, and there may be "moisture" in current demand. Since the second half of the year, issues such as repetition, over-ordering, and long and short materials have attracted attention, and have become "murmurs" under the stock-out and price-increasing market.

Previous Taiwan media reports pointed out that the long-term and short-term material problems were serious, which led to the decline in shipments of the notebook foundry Compal in the second quarter, and the accumulation of long-term materials caused the inventory to increase by 37% year-on-year. This news reflects that the problem of long and short materials poses a hidden danger to business operations. If this problem intensifies, it will obviously affect more manufacturing companies, affect their production and shipments, and then drag down the overall demand for components.

At the same time, the surge in prices also caused dissatisfaction with some downstream companies. In August, LED display manufacturer Lanpu Video reported the upstream IC supplier Fuman Electronics, which reflected that under the tense market situation, upstream and downstream enterprises began to have conflicts. Regarding the allegations, Fuman Electronics pointed out that it has not established a direct supply relationship with Lanpu Video, which mainly obtains goods from agents. This statement suggests that the chip market has reached the point where it is now, and market speculation is a big push.

For a long time, roasted seeds and nuts have been common in the chip market, but this round of market is rare in both depth and breadth, and has long attracted the attention of national regulatory agencies. At the beginning of August, the State Administration for Market Regulation has begun to investigate issues such as speculation in the automotive chip market and price hikes. Based on price monitoring and reporting clues, an investigation has been filed against automotive chip distributors suspected of price hikes.

Automotive chips are the most severely stock-out and price-increasing category, including a large number of MCUs, MOS, and IGBTs. The launch of the investigation by the General Administration of Market Supervision will help eliminate irrational elements in the market, relieve the cost pressure of downstream automakers and component manufacturers, and the overall industry chain environment will also be improved.

On the whole, the current fundamentals still support the continuation of the market, but there are also some reverse signals that need to be paid attention to, and the judgment of market expectations should be adjusted in a timely manner.

Indasina has been committed to chip agency for 16 years, a complete solution provider for projectors, TVs, set-top boxes, and screen devices. Main business: main control chips, microprocessors, flash memory chips, electronic components, set-top box main control, MUC single-chip microcomputer , FLASH, DDR, MOS tube, crystal oscillator, storage, SDRAM and other products, and can provide customers with BOM cost optimization services. We insist on giving priority to quality and service, and serving customers at preferential prices. Acting for Winbond, Nuvoton, ALI, Airoha, Ingenic, BOYA, sinopower, Zealcore, GMT, IMQ, edgeless and other brands. Those who have obtained the right of distribution are: GD, MXIC, Hynix, SAMSUNG, NANYA, ETRON, UTC and other brands. It laid a solid foundation for the company in the DVB DVR DVD automotive electronics industry. There are more wonderful articles to share <ST MCU STM32F030C8T6 LQFP-48><Winbond W25Q64FWZPIG 1.8V 64M-BIT>

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