Sixty or seventy yuan dropped to 3 yuan, and 1 yuan fell to one or two cents… The market price of analog chips led by TI and ADI ushered in a big dive. In contrast, last year, high-priced rush purchases and the use of code farmers to write software to grab chips have become the “normal” of lack of cores in the bizarre market.
Although the market price of analog chips is falling sharply, many people’s psychological prices have not returned to normal. ADI CEO’s words “orders are slightly reduced” first made semiconductor stocks feel the chill, or from the side, it indicates that the future analog chip market will return to a rational trend .
Big-name analog chips are constantly being slashed by real demand, and several domestic alternative manufacturers have emerged, and more and more downstream customers are looking for domestic alternatives, which has brought new opportunities to the spot market dominated by imported chips, and has weakened the arrogance of big-name price hikes. temptation.
What does the cooling of the market in which analog chips represent? What is the capability and potential of domestic analog chips?
The price has shrunk wildly
“Grab” the immovable chip
Most of the general-purpose analog chips experienced a “highlight moment” last year, including TI, ADI, Maxim (later acquired by ADI), Infineon and other analog chip manufacturers. The most notable is TI’s analog chips. As the number one hot item in the demand market, the market price has skyrocketed, which is comparable to the hot market of ST MCU’s continuous price increase.
During the panic last year, the market price of TI was pushed up step by step, and the market kept a close eye on the price. If the price was slightly lower, it would be quickly won, and the cost for end customers to purchase chips at high prices was also increasing. The shortage of many chips in TI has spawned the gray business of writing plug-in software to help rob chips. However, in September last year, advertisements for robbing chips began to appear, such as “seckill software production” and “real-time monitoring system supports a refresh rate of 0.05”. Some sellers offered an annual price of 68,000 yuan. The price and quality of TI’s official website are still attractive to many people. At that time, buying a snap-up software catered to a part of the long-term, large-scale purchase demand market.
Nowadays, the chips on the official website of TI, an analog chip manufacturer, are like out-of-date Internet celebrities. The demand is not as good as before, and the business of chip rush software is bleak. I heard that the original TI factory also opened a green channel for customers on the official website.
The performance of the entire analog chip spot market has also experienced a “roller coaster”, from a shortage to an oversupply.
From the end of 2020 to 2021, the shutdown of the epidemic caused the chip delivery time to be extended to half a year or even 50 weeks or 54 weeks, while only 52 weeks in a year. For example, at the beginning of last year, the changes in the delivery time of Meixin were more obvious, and many of them were extended from 8-10 weeks to 20 weeks, which brought a certain degree of shortage. The shortage of wafers and the repeated epidemics, Infineon’s conventional materials are out of stock, and the limelight of price increases and prolonged delivery times has intensified.
Delivery is difficult, so that the quotations of ADI, Maxim, TI and other materials have increased by 20%-30% in the spot market, and the price of individual models has doubled. The low-priced materials have fallen into the “core” shortage. What’s more, even at a high price, it can’t be bought. The price increase covers more and more models, and the market is unprecedentedly hot. Coupled with the downward shift of upstream costs in the industrial chain, chip manufacturers are under pressure to adjust prices, giving the spot market an additional reason to increase prices.
Now that the cold winter of consumer electronics demand is coming and the market is down, once these high-premium analog chips return to their normal prices, the magnitude will be more obvious.
Such phenomena abound, especially for models with high popularity and high circulation on the market. For example, TI’s LM358, which once rose to 1 yuan, is now back to one or two cents; TPS51200DRCR, which once reached sixty or seventy yuan, is now three yuan. The agent source of ADI interface isolation IC (such as ADMx, ADUMx) is pushed to the market, and the price has plunged…
ADI’s market share is second only to TI. In June this year, its market demand has decreased significantly. The price of general-purpose chips has dropped significantly, and there are few orders. It used to be a rush to buy, but now it is a wait-and-see, price comparison, and downstream terminals all hope to use lower Get the chips you need.
Selling watermelons in summer and roasting sweet potatoes in winter, adapting to the cycle, is a principle that small stall owners who are open all year round also understand. Last year, customers who were short of chips were looking for chips everywhere, and sellers developed software to grab chips. This year, if there is no shortage of chips, they will change the platform to routinely monitor chips, or find other ways to make a living. Under the influence of the risk of excessive prosperity last year, it is said that some sellers in Huaqiangbei have abandoned their stores and left when the spot market price has shrunk so wildly.
digital chip falls
The analog chip can’t stand up
Under the global inflation and economic downturn, when ADI’s latest financial report was announced recently, the CEO added a sentence: the number of canceled orders increased “slightly”. As soon as the news came out, ADI led the decline in semiconductor stocks that day, and the stock price of rival Texas Instruments (TI) also closed sharply lower. Despite this, the demand from the analog manufacturers still exceeds the supply, and the revenue in emerging fields such as automobiles and communications is very strong. ADI has recently issued a price increase letter due to the skyrocketing cost of wafer manufacturing.
TI and ADI, as the global analog chip leaders, have a combined global market share of more than 32% (TI 19%, ADI 13%), occupying a relatively important place in the Chinese market. In the analog chip spot market of TI and ADI, the price of general-purpose products has dropped sharply, and the order demand has dropped sharply, showing another appearance.
According to TrendForce, recently, the phenomenon of order cut off of PMIC (power management IC), CIS, some MCU and SoC products has emerged. Although consumer applications are still the mainstay, wafer foundries have been unable to bear the large number of orders cut by customers, and the capacity utilization rate has increased. It began to slide, from the “comprehensive chip shortage” two years ago to today’s “structural imbalance”.
Today, the performance of the spot market is largely due to the foam component when the core was lacking before. Panic repeated orders and blind stocking once pushed up the market price of analog chips. Special chips such as automobiles and industrial control still maintain high demand. Affected by the sluggish consumer demand, the price of analog chips has fallen, showing a situation of “one cold and one hot”.
Different from the attributes of analog chips, the well-known CPUs, mobile phone AP processors, SoC chips (such as Qualcomm Snapdragon), MCUs for large and small home appliances, etc., all have a unified name – digital chips. Digital chips are used for logic operation processing and control, digital signal encoding and decoding. With the rapid development of communication and image quality, the replacement is fast. Therefore, once demand surges or is sluggish, such as consumer electronics inventory is too low or too high, it will be affected. The influence of the mobile phone company also appeared quickly, just like the recent wave of slashing orders from major mobile phone manufacturers and laptop manufacturers.
Digital chips are experiencing a rare downturn. In fact, if it weren’t for the lack of cores last year and the flood of speculation, the price plunged after the bubble burst, and analog chips would be more “resilient” for a long time.
The analog chip ASP (average retail price) is low and stable, and the certification period and life cycle are long. For example, an audio operational amplifier product from TI, which was launched in the 1970s and 1980s, is still on sale today, with a product life span of more than 40 years.
There are many kinds of analog chip products, and the downstream application fields cover almost all fields of life and production. In addition, the performance, life cycle, price, and performance of analog chips are relatively stable in all aspects. Therefore, the analog chip market is not easily affected by changes in the prosperity of a single industry. Compared with other types of chips, the price fluctuations are relatively small. As such, the analog chip market is seen as a “barometer” for the semiconductor industry.
Nowadays, the spot market of general-purpose analog chips (including power management chips) cannot support itself. Affected by the pressure of destocking in the consumer-grade application market such as mobile phones and panels, the spot market frequently reduces prices to digest inventory. This “barometer” issued Warning.
The drastic changes in market prices do not affect the continuous growth of analog chips. As an indispensable component of electronic products, the market size of analog chips continues to expand. According to IC insights, the global analog chip market will reach US$74.131 billion in 2021, with a year-on-year growth rate of more than 30%. In 2022, the analog circuit industry will still maintain a rapid growth momentum. It is estimated that the total global analog IC sales in 2022 will reach 83.2 billion US dollars, a year-on-year increase of about 12%. In the global analog chip market, there was a monopoly of established international manufacturers, and an emerging force that cannot be ignored is rising.
“You raise yours, I’ll take mine”
Large shortages caused by unstable factors such as Sino-US frictions, epidemics, and natural disasters have made chips that once relied on imports become scarce. In addition to MCUs, analog chip prices also experienced a surge in the spot market last year. New energy vehicles and 5G applications The surge in demand for analog chips, especially power management chips, makes this supply and demand even tighter.
With the ease of wafer production capacity and the structural adjustment of demand, general-purpose analog chips with high liquidity have gradually eased, and a new force is emerging, causing many terminals to withdraw from the rising price in the spot market. That is domestic substitution. Domestic analog chips have weakened the market dominated by big brands such as TI and ADI to a certain extent. The discussion about “who is China’s Texas Instruments” is becoming more and more intense.
The generic materials that can be replaced have been replaced, and waves of price increases have instead helped several domestic analog chip manufacturers, and many terminals have the same understanding of domestic replacement. The price of its own analog chip brand is lower than that of overseas brands, and its performance does not collapse, which is the primary meaning of the existence of domestic alternatives. Dachang issued a price increase letter from Dachang, and the market speculated or fell in price. It went up or down, and it no longer had a big impact on domestic substitution.
A friend in a distribution market observed that despite a wave of major shortages and price increases last year, there has been a large demand for domestic replacement of general-purpose analog chips, and domestic replacements have appeared in customers in the fields of automobiles and medical care. At a time when the international situation is unstable, the country is also promoting domestic substitution. A terminal seeking to replace TI materials told us that the bidding requirements of some state-owned enterprises and central enterprises will clearly mention the localization demand, which also stimulates a wave of terminal suppliers. domestic alternative.
In 2020, China’s analog chip market will account for 36% of the global market. The China Business Industry Research Institute predicts that my country’s analog chip market will reach 295.61 billion yuan in 2022. So how many overseas giants can domestic substitution eat?
Taking the three domestic alternative giants, Silijie, Shengbangwei, and 3PEAK as an example, the revenue in 2021 will be sorted by size: Silijie is about NT$21.5 billion, or about RMB 4.89 billion, and the amount of revenue in 2021 is about NT$21.5 billion. Bangwei is about 2.2 billion yuan, and Srip is about 1.3 billion yuan.
Silijie focuses on power management chips, and has successfully replaced TI’s LDO and DCDC. According to the annual report of Silijie, the IC used by domestic analog IC companies in terminal products is not as wide as that of Silijie. Shengbang Micro has nearly 3,800 products available for sale, covering the two major areas of signal chain and power management. Siruipu, which specializes in ADC signal chain products, has more than 1,600 models displayed on its official website. It is said that “before the ‘Huawei 9.15 ban’ came into effect, it went from grabbing orders from his family to bursting, and won a large number of orders from Huawei.
TI has more than 80,000 part numbers, and ADI has more than 75,000 part numbers. The three major domestic manufacturers combined may not have as many as TI or ADI, but from another perspective, there is a very broad space for substitution, and there are industry insiders. Said that Shengbang Micro has benefited from the Sino-US trade war, and even “eats enough” to replace TI. Only at this level, the self-sufficiency rate of domestic analog chips is still insufficient. Before 2020, it was lower than 10%, and it has gradually increased in the past two years. It is conceivable that there will be a gradual replacement and gradual evolution of the domestic analog chip market. Wonderful.
Due to the large number of analog chip product categories and the relatively scattered competitive landscape, domestic substitution often begins to cut into a specific field and specific product, and gradually expands the product category. The analog chip design focuses on personnel experience. 3 to 5 years is a small amount of time, and 10 years is considered sufficient. If there is enough experience in the design, the requirements for the quality of the designers are often higher than the quantity.
Most of these domestic analog chip companies are in the initial stage of the industry. Although the products basically belong to the sub-molecular category of specific application fields, the performance of the core products has been equal to that of the international leading companies.
Recently, the demand for cooling from the terminal has entered the adjustment stage for the supply of analog chips, especially power management ICs. The upstream 8-inch wafer production capacity has begun to loosen, and new production capacity that is difficult to obtain has become easier to obtain. According to DigiTimes, the power management IC (PMIC) tightening situation is lifted, and cost price reduction will be the next hurdle for PMIC to return to normal. After cooling down, the analog chip market has returned to rationality. As for the speed at which it will fully return to normal, further upstream and downstream games are required. At the same time, our belief in domestic substitution is becoming more and more firm.