Recently, the storm of semiconductor chip cut orders and price reductions expanded, power management ICs (integrated circuits), MCU (microcontrollers) also appeared to offer a tidal wave of plunging prices, especially for consumer applications the largest price drop. TSMC's three major customers to reduce the order volume of the news, so that the market is also very frightened. In this way, the industry on the semiconductor industry will enter the downward cycle of speculation.

Industry insiders said that although the semiconductor market rise slowed down, but relative to the past, still at a high level. Some time in the future, with the further release of production capacity and demand shrinkage, the whole industry into a recession or probable events.

1.Cut orders! A number of chip original manufacturers issued a warning

Intel Chief Financial Officer David Zinsner ( David Zinsner ) said in June that the outlook for the second half of this year than last month "more noisy", so the company will seek to make spending and investment in line with this reality. Intel temporarily froze hiring in its PC chip unit in June, among other austerity measures.

Memory maker Micron Technology Inc. also issued a weak sales outlook last week, with the company's chief executive Sanjay Mehrotra warning that "the industry demand environment has weakened" with declining PC and smartphone sales. Some spending plans are being cut to accommodate the new market dynamics.

Chip executives, computer retailers and distributors said the market has sluggish in recent months - more sluggish than many expected at the start of the year - as U.S. inflation hit 8.6 percent in May, its highest level in more than 40 years, ahead of federal preparations to raise interest rates.

Kent Tibbils, vice president of marketing for major California-based electronics distributor ASI Corp. noted a drop in demand for computers around March, saying, "The upside is high and the downside is dismal." "There's usually more of a gradual course, but it's been a little more volatile than we usually expect."

2.Sustained! Dell cut orders by 50%, the market "hit hard"

Consumer electronics, represented by cell phones and computers, have experienced high growth in previous years after a decline in the trend, or negative growth for the whole of 2022. Market research firm Counterpoint predicted that in 2022 the global smartphone market shipments will decline 3% year-on-year; and Gartner recently released a new report that this year, global PC and smartphone shipments will shrink, predicted that in 2022, China's smartphone shipments will be 18% less than last year.

In fact, as early as April this year, there is news that consumer electronics terminal chips or face 30% of the substantial "cut", the supply chain is actively stocking and terminal manufacturers will face huge inventory pressure. Now, the "cut" phenomenon from the consumer electronics terminal, began to gradually spread to chip manufacturers.

Market institutions Digitimes Asia, a report said, due to the "mining" boom receded and the decline in demand in the PC market, TSMC's two major customers AMD and Nvidia to TSMC to indicate the adjustment of order planning. Among them, AMD to reduce the fourth quarter of this year to the first quarter of 2023, a total of about 20,000 pieces of 7 or 6nm orders, Nvidia requested to delay and reduce the first quarter of 2023 orders.

In this regard, TSMC said, "Do not comment on market speculation and individual customer news."

In addition, in the consumer electronics category, in addition to cell phones, TVs, "winter" and personal computers (PC).

On July 11, market research firm IDC released data showing that in the second quarter of 2022, global traditional PC shipments fell 15.3% year-on-year to a total of 71.3 million units. Among them, the top three are Lenovo, HP and Dell, with shipments down 12.1%, 27.6% and 5.3% year-on-year, respectively.

On July 9, Taiwan's "Business Times" reported that U.S. PC maker Dell urgently notified panel makers that desktop and notebook computer display panel orders have been cut by 50 percent since July, affecting panel makers in China, Taiwan and South Korea, including BOE, LGD, AUO, Qunar, Huaxing Optoelectronics, Sharp and others.

As each notebook computer monitor only need a panel, the same each desktop usually only need to be equipped with a monitor. Therefore, Dell will notebook, desktop monitor panel significantly cut 50%, also means that Dell's entire PC product line will cut 50%.

Following the IC, power management IC and CIS (contact image sensor) rumors of price cuts, following the driver IC, power management IC and CIS (contact image sensor) rumors of price cuts, MCU also recently appeared to "cut single" price pressure, Infineon, STMicroelectronics, DEI and other MCU manufacturers are rumored to offer a serious decline Infineon, STMicroelectronics, DEI and other MCU manufacturers are rumored to have experienced a serious drop in price.

Infineon, STMicroelectronics, DEI and other MCU makers are rumored to have suffered serious price declines. The Philadelphia Semiconductor Index of U.S. stocks has slumped nearly 40% from the beginning of the year, with TSMC, Micron, ASML, Applied Materials, Panlin Semiconductor, Nvidia, Intel and other companies pulling back sharply.

A variety of information shows that the consumer electronics industry has fallen into recession after the demand from the epidemic has been met.

3.Divergence! Vehicle-regulated semiconductor boom remains

However, although the consumer semiconductor "winter is coming", but the data center and automotive semiconductor demand is still stable upward.

AMD's CEO Dr. Zifeng Su said that demand for data center chips remains strong, helping to offset some of the decline in demand for consumer semiconductors. automotive and POS segments. As a result, market demand for mature 20/28nm processes remains very tight.

From the chip delivery data, the chip delivery date is still in growth so far in 2020, but the segmentation of products is diverging. Summarized as follows.

SusquehannaFinancialGroup research shows that chip lead times in March extended by 2 days compared to February, reaching 26.6 weeks.

According to electronic components distributor Future Electronics' 2022Q2 Market Sentiment Report data, mid- to low-end branded memory, RF products, etc. are well stocked and have shorter lead times.

The turnaround time for vehicle-standard power managers is 40-52 weeks.

Switching regulators and other power managers have a lead time of 30-52 weeks.

Power devices (MOSFET, IGBT) most of the delivery period for 30-60w, the above devices still have a rising trend.

High-end devices (including MCU, MPU, FPGA, LCD) delivery time is generally higher than 40 weeks, the supply-demand imbalance is still more serious.

In addition, although semiconductor companies are preparing for the "winter" in advance, but the current boom in the semiconductor foundry industry remains, Gartner IT data show that the first quarter of the global chip factory almost at full capacity.

4.Conclusion

The semiconductor industry has always been cyclical. While we don't know what the future holds, we think there is reason to believe that future cycles may be calmer as capacity catches up with demand. Even if the cycle continues, the long-term trend appears to be in favor of semiconductors.