Chip factory: Customers can no longer afford price increases
Latest update time：2022-03-09 11:21
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Source: Content from Central News Agency, thank you.
The semiconductor industry is expected to continue to grow this year, and the supply of wafer foundry capacity will remain tight. After the price of chip products soared last year, it will be more difficult to raise prices further this year, and the pressure on the gross profit margin of IC design companies may increase as a result.
In recent years, IC design houses have suffered from a severe shortage of wafer foundry capacity and have been exploring new suppliers or adopting new process technologies. The wafer foundry capacity they have this year has generally increased compared to last year.
As the new production capacity of wafer foundries is not expected to be significantly opened up until next year, the wafer foundry capacity increase achieved by most IC design houses this year is limited, and it is expected that the wafer foundry capacity this year will still maintain a tight situation of supply exceeding demand.
However, the chip product market has begun to change and is no longer in a tight situation. As the market demand for Chromebooks, TVs, etc. has slowed down, panel driver IC manufacturers Dontech and Tianyu have both stated that market demand is gradually returning to the traditional off-season and peak-season cycle.
Touch screen chip maker Elan Electronics and sensor chip maker Vision Semiconductor also expect that their first-quarter operations will be affected by the off-season effect, and their quarterly revenue may decline compared to the fourth quarter of last year; among them, Vision Semiconductor's first-quarter revenue will decrease by about 10% quarter-on-quarter.
As wafer foundry quotations continue to rise, it is difficult for chip products to increase in price further. Microcontroller (MCU) manufacturer Holtek revealed that considering the market competition situation, if wafer foundries increase prices again, Holtek will try its best to absorb the increased costs on its own.
Realtek, a network communication chip manufacturer, still has strong customer demand, but customers have already said they cannot afford further price increases. This may increase the pressure on the gross profit margin of IC design companies.
Duntech admitted that production costs will continue to rise in the next few months, and product prices will remain stable, which may affect the decline in gross profit margin. Elan also expects that due to the continued rise in wafer foundry prices, gross profit margin may fall from 49.4% in the fourth quarter of last year to 46.5% to 48.5% in the first quarter.
Faced with increasing pressure on declining gross profit margins, many IC design companies plan to optimize their product portfolios and invest the acquired wafer foundry capacity resources in products with higher gross profit margins to ensure that gross profit margins remain stable.
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