Such chip companies are facing a wave of layoffs

The panel market is experiencing a cold wind. Following the salary cuts of Innolux's senior executives in October, the operations of upstream key component-driven IC companies have become even more precarious. Some benchmark factories have recently followed up on salary reductions for senior managers and are planning to initiate layoffs before the Lunar New Year. , is the first industry to face the storm of layoffs under this wave of economic reversal in the electronics industry.

The technology industry is in a downturn. In order to save costs, manufacturers are cutting salaries for senior executives, encouraging employees to take vacations, and not taking up the slack in case of vacancies. Even on the market, the industry emphasizes that "there is no unpaid leave." People in the industry do not mince words, "layoffs are better than unpaid leave." What’s worse, I’m afraid this year will be very difficult.” The related storm has spread from panel manufacturers such as Innolux to upstream driver IC factories, highlighting the severe situation of the panel market.

Driver IC manufacturers previously benefited from the epidemic, which boosted laptop and TV sales. Profits generally reached peak levels in the past two years. As a result, manufacturers aggressively recruited talents, initiated substantial salary increases or structural salary adjustments, and issued high dividends. However, now they have There are reports of high-level salary cuts and planned layoffs, which are in sharp contrast. The main reason is that driver IC prices have plummeted due to the sluggish panel market conditions, and the epidemic dividend has faded.

It is understood that the relevant layoff plan is different from the previous end-of-year performance appraisal of "eliminating the weak and retaining the strong", but is a measure to significantly save costs and reduce operating expenses by operating under pressure. The industry admitted frankly that the current inventory level is still high and the financial pressure is high. It is not easy to consider salary cuts and layoffs. However, there is really no way. To face the challenge of possible losses in the future, various solutions that may help the company's operations are available. In discussion.

It is reported that key upstream components of the panel driver IC indicator factory are planning to start layoffs before the Lunar New Year. Industry insiders admit that not only panel-related chip factories are under great pressure, but also the entire IC design industry is having a hard time this year. The main reason is that upstream wafer foundries have not yet appeared. Comprehensive price cuts, and even the pressure of long-term contract defaults. Downstream companies have to face weak client demand, and most of them have to cut prices to compete in order to obtain orders. These factors will affect the gross profit and profitability of IC design factories in the second half of the year.

Currently, most IC design factories are actively removing inventory, limiting orders, and trying their best to retain cash to avoid increasing the financial pressure caused by the continued increase in inventory levels. At the same time, they must sell goods at reduced prices to "fight for cash." Some IC design factories pointed out that the average selling price (ASP) has gradually declined since the third quarter. "If you want to ask customers to buy more goods, you must lower the price."

An unnamed IC design factory admitted frankly that the demand for some products is indeed very poor, and "the subsequent sales volume cannot be estimated at all" and the visibility is low. Basically, customers are now unwilling to accumulate inventory and place as many orders as there is demand. Due to poor market sentiment, IC inventory removal may be slower than expected.

Since the progress of inventory depletion is not as good as expected, IC design companies have also begun to significantly correct their wafer yields in foundries. Microcontroller (MCU) manufacturer Holtek revealed that after reducing the amount of wafer production, IC output in the fourth quarter was only about half of the previous quarter. However, many IC design factories have mentioned that wafer foundries are reluctant to cut prices, and only a few manufacturers are willing to face the difficult times. It is even reported that TSMC will proceed with the original price increase plan next year. Due to the high cost of wafer foundry, IC design factories are facing quite a headache.

In order to control high inventory, Elan, the global leader in notebook touch panel modules and touch screen ICs, will terminate the three-year production capacity guarantee contract with the wafer foundry in advance this quarter and set aside related liquidated damages for the industry. The loss is the first case of a domestic IC design company breaching a long-term contract with a wafer foundry, and the market is highly concerned.

This week, Novatek, Zhixin, Duntech, Yingguang and other IC design factories will hold legal briefings, focusing on supply chain-related and inventory issues.